Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH RAILWAYS BILL (By Order)

BRITISH TRANSPORT DOCKS BILL (By Order)

BRITISH TRANSPORT DOCKS (FELIXSTOWE) BILL (By Order)

GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)

LONDON TRANSPORT BILL (By Order)

Orders for Second Reading read.

To be read a Second time upon Thursday next.

Oral Answers to Questions — HOME DEPARTMENT

Obscene Publications Act 1959

Mr. Carlisle: asked the Secretary of State for the Home Department whether he will institute a review into the working of the Obscene Publications Act 1959.

Mr. Michael McNair-Wilson: asked the Secretary of State for the Home Department whether he will amend the Obscene Publications Act 1959 with a view to redefining obscenity.

The Secretary of State for the Home Department (Mr. Roy Jenkins): I have no plans for immediate special legislation, but I am following the current public debate closely and I understand some of the concern. Where there is a flux and a conflict of standards, which is no doubt reflected in different jury verdicts, I am not convinced that there is any simple, workable and acceptable change in the law which would resolve the problem. However, I would not for a moment claim that the present law is perfect, and I shall keep the matter under review. But it is rarely wise to react immediately to a particular case.

Mr. Carlisle: I fully accept the real difficulty which exists in amending the law on obscenity. When we were in Government we looked at the question in the context of our Bill on indecent display. I take it that the Home Secretary now accepts that the trend of recent decisions in the courts shows that the Act is not working and that unless Parliament is prepared to tackle again both the question of the definition of obscenity and the defence of the public good, we shall face a situation in which standards will rapidly decline. We are creating a climate in which practically anything goes—

Mr. Speaker: Order. When an hon. Member is invited to ask a supplementary question, I hope that he will ask only one.

Mr. Carlisle: I apologise, Mr. Speaker. I end by asking the Home Secretary whether he accepts that this is a matter of concern to many people.

Mr. Jenkins: I accept that it is a matter of concern. Strong views are held in differing ways. I endeavoured to indicate to the hon. and learned Member for Run-corn (Mr. Carlisle) that I do not treat the matter lightly or dismiss any practical solution, but I remain unconvinced in this respect. There have been conflicting decisions recently. They seem to turn more on jury decisions than on what judges indicate, and it is therefore an illusion to think that a simple change in the law would solve the problem.

Mr. Stonehouse: Has my right hon. Friend's attention been drawn to cases in which acquittals have been obtained on charges under this Act by unanimous verdicts of juries, yet the Director of Public Prosecutions has reinstituted charges not only a second but a third time, as in the Lindsey case? Will he do something about this practice, which is bringing the law into disrepute?

Mr. Jenkins: My right hon. Friend will be aware that I am not responsible for the Director of Public Prosecutions. It would not be right for me to issue pronouncements on that subject. I am not sure whether the Director has acted exactly in the way described by my right hon. Friend, but I have no doubt that the Attorney-General will take note of what he said.

Mr. McNair-Wilson: Even if the Home Secretary is not prepared to amend the definition of obscenity in the Act, is he aware that there is a case for banning material that encourages the concept of sexual acts between human beings and children and between human beings and animals, and sado-masochism?

Mr. Jenkins: I have no doubt that there are matters of this sort which nearly everyone would regard as objectionable, as does the hon. Member. It is not easy to draw these frontiers on the basis of categories, and I suspect that there would be great difficulties in attempting to do so.

Mr. Alison: We welcome the helpful and constructive reaction of the Home Secretary to the Questions and to the misgivings expressed by the public. We also welcome his willingness to look seriously at alleged shortcomings in the Act. Will he go further and undertake to give sympathetic consideration to receiving an

all-party deputation, which could elaborate some of the difficulties being experienced over the way the Act is working?

Mr. Jenkins: I would always receive an all-party deputation on this subject—or any deputation consisting of a substantial number of hon. Members. I would listen to what they had to say. The hon. Member for Barkston Ash (Mr. Alison), in association with some of his hon. and right hon. Friends, has been doing some work on this matter, I believe, and perhaps he would like to talk to me when he has the results of that work.

Mr. Edward Gardner: However formidable the difficulties of drafting a satisfactory legal definition of obscenity, those difficulties do not exist to the same extent in the case of public advertisements and indecent display. Will the Home Secretary show a little more concern for the anxieties of a growing number of people who find it wholly objectionable to have this kind of lewd material thrust upon their attention in our towns and cities, and think again about introducing legislation on the lines of the Cinematograph and Indecent Displays Bill, which the last Conservative Government tried to bring forward?

Mr. Jenkins: I have always made it clear that I do not regard the same consideration as applying to the obtrusion of matters of this sort as they do to other matters of censorship and what people read privately. I have no doubt that the previous Government brought forward their Bill with good intentions, but it did not stand up as a piece of
legislation.

Police Forces (Authorised Establishments)

Mr. Townsend: asked the Secretary of State for the Home Department why the monthly return of strength and vacancies for the police forces in England and Wales, issued by his Department, continues to show separate authorised establishments for men and women.

Mr. Michael Morris: asked the Secretary of State for the Home Department what changes there have been in police establishment since the passing of the Sex Discrimination Act.

The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): From 29th December 1975, when the Sex Discrimination Act came into force, the separate establishments for men and women officers were combined and returns of the establishment after that date will show only the combined figure.

Mr. Townsend: Will the hon. Lady assure the House that no suitably qualified woman will ever be turned away from the Metropolitan Police on the grounds that some arbitrary establishment level has been reached? Will she assure us that everything possible is being done to encourage the recruitment of more women police officers?

Dr. Summerskill: I can give the hon. Member that assurance. When the Act came into force women police officers comprised 5·5 per cent. of the total strength, and I hope that percentage will increase.

Mr. Morris: Is the hon. Lady aware that in Northampton one woman officer has already resigned and a quarter of the establishment is threatening to resign because they have to patrol at night? Does this not demonstrate the need for an amendment of, or a commonsense approach to, some of the police duties that women are asked to undertake?

Dr. Summerskill: Each police force must decide who is to carry out what duties. I do not think I should comment on the situation in the hon. Member's constituency.

Mr. Eldon Griffiths: Does the hon. Lady not agree that whatever the Sex Discrimination Act may say there are some things in the police service, as in many other walks of life, that men do best and others that women do best? Will she be very careful in anything she says or does to avoid the suggestion that there is no difference between a policeman and a policewoman?

Dr. Summerskill: The Act recognises that there are genuine occupational qualifications. In the police force these may include the searching, custody, and escort of prisoners, some forms of detective duties and certain welfare duties, for which either men or women may be particularly suited.

Mr. Speaker: It appears that my appeal is not having much effect and that some hon. Members feel entitled to ask two or three supplementary questions I appeal to other hon. Members to confine themselves to one supplementary question.

Immigration Statistics and Policy

Mr. Lawson: asked the Secretary of State for the Home Department whether he will ask Sir Claus Moser, as part of the inquiry he announced on 14th January, to ascertain the number of Commonwealth citizens ordinarily resident in the United Kingdom, and not yet accepted for settlement, who none the less possess immunity from deportation; and if he will state the Government's policy in general towards the subsequent granting of the permanent right of settlement to those who enter the United Kingdom on a temporary and conditional basis.

Mr. Mayhew: asked the Secretary of State for the Home Department how is the net balance figure for immigration calculated from embarkation and admission figures; and what relevance the figure has in assessing the true immigration level.

Mr. Roy Jenkins: On 14th January, I announced that I had asked Sir Claus Moser to look into the circumstances in which the embarkation of certain Commonwealth citizens was counted twice. I have now received from him a report on how this error occurred, which has shown that it was due to a lack of clarity in the revised instructions which came into effect on January 1st, 1973, and to defects in the supervision of those concerned in the counting. Although it is clear that I, and consequently the House, should have been informed earlier that the error had occurred, I have found no evidence that the officials concerned behaved discreditably or in such a way as to justify disciplinary action.
What is, in my view, of greater public importance is the significance that should be attached in general to these figures of arrivals and embarkations, and I have therefore asked Sir Claus Moser for a supplementary report on this aspect. I do not think it would be either right or necessary to ask him to range wider than this. I shall inform the House in due course of the outcome of this review.

Mr. Lawson: I thank the Home Secretary for that reply. I am glad that he is slightly extending the remit given to Sir Claus Moser, but will he please answer the second part of my Question, which concerns a matter of considerable importance?

Mr. Jenkins: The Government's policy in relation to the subsequent granting of right of permanent settlement and the revocation of conditions is that which has applied for some time. It takes place, unless there are reasons to the contrary, when someone ordinarily resident here has been so resident for five years. This recognition of the facts does not lead to an increase in the numbers settled here. I do not think it would be desirable for people to live here in a state of permanent uncertainty.

Mr. Mayhew: Does the right hon. Gentleman agree that true immigration is made up of those admitted here to settle and those who, having once been admitted as visitors, are subsequently allowed to stay? Are these categories not separately calculated, and can we not have the figures for 1975?

Mr. Jenkins: The hon. and learned Member is almost exactly right. It is the total of these two categories which successive Governments have regarded as the most accurate indication of immigration. They are published each year and they were not affected by the error relating to 1973 and the early part of 1974. They are published and available. Anyone who follows these matters adds the two together and gets the final figure. I am not sure whether we can perform this simple act of addition ourselves. There is no reason why we should not. These are the correct categories to take into account in determining net immigration in any year.

Sir David Renton: Does the right hon. Gentleman agree that in addition to visitors here for a short-term stay, there are also other categories, such as students and people admitted for limited periods of employment, who may well overstay their time, perhaps unknown to the Home Office, but whose dependants will become permanent settlers here? Will he bear this factor in mind?

Mr. Jenkins: This point is very much borne in mind. The problem of dealing with overstayers exercises us, and in a large number of cases when they have been detected they have been deported. If a person overstays and is here illegally, that time does not count towards the necessary period of residency to achieve a permanent right of settlement.

Mr. Whitelaw: Will the right hon. Gentleman assure us that in considering this whole policy and reviewing the position of permanent right of settlement he will always have in mind the policy he stated to Mr. Robin Day on television, of a very restrictive policy towards immigration?

Mr. Jenkins: My policy, which I have stated on a number of occasions and repeat now, is that there is, in present or any foreseeable circumstances, a strict limit on the amount of immigration that this country can absorb. It is right and generally accepted that the rules have to be administered with a reasonable humanity—and problems of humanity do arise. Together with that strong control over immigration, we must have a most determined and liberal policy of complete equality for those settled in this country. I regard these matters as two sides of the same coin.

Police (Accommodation)

Mr. Ronald Bell: asked the Secretary of State for the Home Department what record his Department has of the number of people in the police service for whom accommodation is provided by an arrangement in the nature of a service tenancy or service occupancy.

Dr. Summerskill: There is no central record of the number of service tenancies, and the information could not be obtained without disproportionate cost.

Mr. Bell: If the Home Secretary considers that this system is advantageous to the police authorities and to policemen, will he make representation to his ministerial colleagues that it would be a great pity if it were to be abolished, from a necessary sense of consistency, when the attack is launched on agricultural tied cottages?

Dr. Summerskill: If I may answer on behalf of my right hon. Friend, it is not


proposed to extend the legislation beyond agricultural workers, as they are a special case with special problems, and there was never any Labour Party commitment to do so.

Immigrant Workers (Rights of Residence)

Mr. Canavan: asked the Secretary of State for the Home Department whether he plans to introduce legislation which will give additional rights of residence to immigrant workers and their families.

Mr. Roy Jenkins: No, Sir. Families of holders of work permits are normally given leave to join them for the period during which the holder is authorised to stay in the United Kingdom.

Mr. Canavan: In view of the concern in the Labour movement and elsewhere about the distinction between patrial and non-patrial British citizenship, which often means that a non-patrial citizen is treated as a second-class citizen, will my right hon. Friend introduce legislation to end that unfair discrimination and ensure that full rights of residence and rights to work are extended to all British citizens resident here, irrespective of their colour or country of origin?

Mr. Jenkins: I may have misheard my hon. Friend, but I think that he is creating slight confusion between the right of people to come here and the rights of those who are resident here. The Government have been conducting a review of our nationality and citizenship laws. One difficulty we have suffered is that, unlike most other countries, the United Kingdom has no coherent definition of "citizenship" and "nationality". When that review has been completed. I hope that we shall be able to legislate on the subject. That will mark a substantial step forward in enabling us to determine, on a non-racial but adequately clear basis, who is entitled to be here.

Mr. Stokes: Is the Minister aware that the rights of the indigenous population of these islands are being steadily eroded by so-called anti-discriminatory legislation and that what the British people want from the Home Office is a fair deal for themselves?

Mr. Jenkins: That is what I am endeavouring to give the British people, from the Home Office, bearing in mind that the hon. Gentleman has not a unique right to speak for the British people, who themselves have a sense of fair play. They have a sense of their own rights, certainly, but they also have a reasonable sense of the rights of people who came here a little more recently.

Dr. Edmund Marshall: Has my right hon. Friend considered the possibility of extending the franchise in our local and national elections to all aliens who are resident in this country long enough to be on the electoral register?

Mr. Jenkins: I have not given consideration to that matter. I am not sure what the implications would be, but I shall examine the question.

Mr. Ronald Bell: Is the Home Secretary aware that it is the British people's sense of fair play which is outraged by the flow of immigration that has continued under his stewardship and under the legislation referred to by my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes). Will the right hon. Gentleman do something to restrict the magnitude of this inward flow?

Mr. Jenkins: I have indicated my policy upon this issue. We should probably all get on better and produce a rather more rational climate on this subject if we did not make too many appeals to that abstract concept of the sense of fair play of the British people. [Interruption.] I was replying to the hon. Member for Halesowen and Stourbridge (Mr. Stokes), who raised it in the most personally possessive manner I have ever heard. My remarks were entirely by way of riposte. It is perhaps better to debate the issues on their merits without any of us assuming that we have the monopoly of fair play.

Immigration Appeals

Mr. Brittan: asked the Secretary of State for the Home Department what criteria he applies in deciding whether to reverse immigration appeal decisions taken by an adjudicator or by an immigration appeals tribunal.

The Minister of State, Home Office (Mr. Alexander W. Lyon): We exercise my right hon. Friend's discretion to act


outside the Immigration Rules where an adverse decision taken in strict compliance with the Rules and upheld on appeal would, in his view, result in injustice or undue hardship.

Mr. Brittan: Is the Minister in a position to say whether the percentage of cases in which the initial decision has been reversed is increasing? If so, does he agree that it is undesirable that the decision initially taken should be reversed on the basis of such extremely vague criteria?

Mr. Lyon: No, because the adjudicators and the appeal tribunal have to work within the rules. The exercise of immigration control is the exercise of a prerogative under the discretion of my right hon. Friend. The rules are guidance to the officials and the tribunal about how they should operate, but there is still a reserve discretion, which all Governments use.

Mr. Lawson: Is the Minister aware that the rate of acceptance for settlement of immigrants from the new Commonwealth and Pakistan who entered provisionally and were given revocation of their conditions has more than doubled since the Labour Government took office? Is he satisfied with that rate of increase? How far will it continue? How is it possible to present a rational policy if the hon. Gentleman has no idea of the number of people already here who are not accepted for settlement but whom he cannot deport?

Mr. Lyon: We do not count the number of people here who are not eligible for deportation until we give them unrestricted leave to settle. The difficulty about the hon. Gentleman's onslaught is that it was the Conservative Government in 1971 who legislated that no one who had been resident in these islands for more than five years could be deported. It is on that basis that we remove the conditions after five years. If the hon. Gentleman looks at the figures—which I shall be glad to publish—he will see that the two major increases have been on this account—which the Conservative Government approved in 1971—and on account of marriage—which the House approved last year.

Mr. James Lamond: Is my hon. Friend aware that many hon. Members on the

Government Benches appreciate the fair-minded way in which he listens to representations made on behalf of our constituents who are immigrants, but will he please try to get decisions arrived at a little more quickly?

Mr. Lyon: I am doing my best on the latter count. I am always interested to see how many similar representations I get from Opposition Members.

Mr. Burden: Does the hon. Gentleman agree that when he confirms an appeal decision he should take into consideration matters which are known to him but which the appeal tribunal cannot take into account, to make sure that justice is done?

Mr. Lyon: My objective in using the discretion, which is used only in a minimum number of cases, is always to try to do justice. I seek to apply an emollient between the rules as they are cast and the circumstances of a particular case.

Republic of Ireland Citizens

Mrs. Knight: asked the Secretary of State for the Home Department if he will bring in regulations to deny access to Great Britain of citizens of the Irish Republic who have no means to support themselves and whose presence will be a drain on British Exchequer funds.

Mr. Roy Jenkins: I am not in favour of anyone who is not a national of this country coming here to live off the British Exchequer. But in so far as a problem exists it is not uniquely concerned with citizens of the Republic of Ireland. Nor could it be solved by Regulations alone.

Mrs. Knight: Does the Home Secretary agree that hard-working and responsible taxpayers resent the fact that people come into the country and, having contributed not one penny to the Exchequer, immediately draw benefits? Does he realise that when resentment of that kind builds up the relationship between the United Kingdom and Ireland is affected?

Mr. Jenkins: I agree that there may be resentment, and I think that there is, occasionally. One has to view the problem in its proper proportion. If one is concerned about the resentment it is desirable not to foment it if it is not on a large scale. It has to be remembered that a British citizen can go to any of


the countries of the European Community and immediately draw benefit. Therefore, the position of Ireland is not unique. Clearly, I am not in favour of people coming here to live off the back of the British Exchequer, which has enough on its back already. I agree with that principle, but on the basis of a very limited number of cases I cannot embark on a complete change in our relationship with the Republic of Ireland and the EEC.

Mr. Fernyhough: The hon. Member for Birmingham, Edgbaston (Mrs. Knight) campaigned assiduously for Britain's entry into the Common Market, and as so many other hon. Members did likewise. Is it not true to say that if we introduced Regulations of the kind that the hon. Lady wants, we would be acting in conflict with the principles of the free movement of people, which we accepted when we became members of the EEC?

Mr. Jenkins: The hon. Member for Birmingham, Edgbaston (Mrs. Knight) confined her remarks to citizens of the Irish Republic. However, the Irish Republic is a member of the European Community. Even if we were to revoke the common travel area, which would be a major step to take, the provisions of our membership, the membership of the Irish Republic and membership of the other seven countries of the Community would mean that no different position existed.

Mr. Powell: As the right hon. Gentleman has twice confirmed that he disapproves of cases of the kind which he defined, how does he propose to deal with this problem?

Mr. Jenkins: I believe that the right hon. Gentleman would agree with me on certain matters at present. There are a number of things of which I disapprove and wish did not happen. However, it is not possible or competent for a Government to deal with all of them by legislation or even by Regulation.

Mr. Wellbeloved: Does my right hon. Friend not agree that hon. Members would serve the nation better if they brought to the attention of the appropriate Department those cases in which there is an abuse of public funds, rather than coming to this House and making smears and innuendoes about other

people? Is my right hon. Friend aware that in the latter part of last year the Daily Express, a so-called reputable newspaper, published three letters making grave accusations about the acquisition of a car and a television set by means of supplementary benefits, but that when those cases were investigated it was found that there was not a scintilla of truth in the allegations? It is about time that hon. Members stopped spreading these smears, which are completely without foundation.

Mr. Jenkins: I do not believe that my hon. Friend's powerful intervention calls for any reply from me.

Immigrants (Wives and Dependants)

Mr. Goodhart: asked the Secretary of State for the Home Department how soon the admittance of eligible wives and dependants under the Immigration Act 1971 and East African Asians with special vouchers is likely to be completed.

Mr. Alexander W. Lyon: We cannot make forecasts of this kind because the future rate of entry depends on a wide variety of social, economic and other factors. But it is likely that the United Kingdom passport holders who are heads of household in East Africa and who wish to come here will have been admitted by the end of the 'seventies.

Mr. Goodhart: As polygamy is legal in a number of Commonwealth countries, will the Minister give an assurance that second wives and the children of second marriages are not included in the list of those eligible for entry?

Mr. Lyon: The term "wife" in the 1971 Immigration Act has been defined by both the tribunal and the courts as including a second or a third wife in relation to a polygamous union that took place when the husband was domiciled in a place where polygamy is permitted. However, difficulties arise, particularly in relation to Pakistani wives, when the marriage took place when the husband was domiciled in this country.

Mr. Hooley: Will my hon. Friend speed up the mechanics of the process of dealing with applications from wives who wish to join their husbands in this country?

Mr. Lyon: I am doing my level best to do exactly that, although sometimes I am criticised by Conservative Members. We have managed to increase the rate of interviewing on the Indian subcontinent by almost 100 per cent. in the last year. I hope that the situation will continue to improve.

Mr. Budgen: Will the Minister confirm the report by Mr. Amit Roy in the Daily Telegraph of 2nd February that fresh instructions have been issued to immigration officers concerning the entry of Commonwealth citizens into this country? Will he further confirm that the spirit of these fresh instructions is "If in doubt, let them in"?

Mr. Lyon: The hon. Gentleman is referring in particular to the acceptance of a father or mother coming to the wedding of a child in this country, where there may be doubt whether that father or mother will use that visit as a device for settlement. We have said that the greatest humanity should be applied when those cases are considered because it is often extremely difficult to resolve the intent in an individual's mind. Where that conflict exists, the answer is that if there is doubt we allow them in.

Mr. Biggs-Davison: May we take it that three polygamous unions are the absolute limit?

Mr. Lyon: I believe that by the laws of Islam and Pakistan, four is the absolute limit.

Mr. Shersby: asked the Secretary of State for the Home Department what changes in the arrangements for the admission of the remaining wives and dependent children eligible to enter Great Britain under the Immigration Act 1971 have been made in 1974 and 1975; and what further changes, if any, are in prospect.

Mr. Alexander W. Lyon: In view of increasing delays in the issue of entry clearances to wives and children in the Indian subcontinent, a reinforcement of the staffs at Dacca and Islamabad was announced on 26th June 1974. As a result of my visit to the subcontinent in January 1975 a number of changes were made last year in the processing there of applications for entry clearances; in particular, outstanding applications by

unaccompanied wives, and mothers with children under 10, are being dealt with more expeditiously under a simplified procedure. The arrangements are kept under review.

Mr. Shersby: What immigration controls now operate in relation to newly acquired wives of immigrants not born but settled in the United Kingdom and who return briefly to their native land to participate in arranged marriages in accordance with their custom?

Mr. Lyon: I am glad that the hon. Gentleman stressed the last words, because one has to recognise that the Asian custom is an arranged marriage and that there is nothing dishonourable or disreputable about it. It is not necessarily a device for evading English immigration controls. We respect that custom, and anticipate that in the early years of the change of rule that was made last year by this House there will be a slight increase in immigration as a result. The figures for last year are available and have been announced. I do not expect them to increase very much in future years.

Mr. Thorne: Is the Minister aware that a recent humanitarian decision made by him has been welcomed in Preston by Asian and non-Asian members of the community alike, and will he indicate whether he intends to have an early review of the working of the whole of the Immigration Act 1971?

Mr. Lyon: We have already announced that when the nationality review is complete we shall be reviewing the whole of immigration law, but it is impossible to do so until we have finally resolved the central issue of who is a British citizen. When that is done, we shall get on with the matter.

Mr. Michael Morris: Is the Minister aware that despite his visit to the Indian subcontinent, it is still taking the best part of a year for genuine cases to enter this country?

Mr. Lyon: Yes, Sir, and I am glad that sentiment has come from the Opposition side of the House. It ought to be realised, in the whole of this dispute which has flared up again, that there is real anguish and concern for thousands of wives and children in the subcontinent


who have the statutory right to come and ought to be allowed to come as quickly as they can.

Mr. Woodall: Is my hon. Friend prepared to consider changes in the arrangements governing the entry of husbands into this country? Is he aware that a constituent of mine, Mrs. Linda Sekhor, married an Indian gentleman in February 1975 and that his application for entry into this country will not be heard in Delhi until July of this year?

Mr. Lyon: Yes, and I agree with my hon. Friend that that is a disgrace. However, we are doing our best to try to expedite matters so that that kind of delay does not occur in the future.

East African Asians (Entry Procedures)

Graham Page: asked the Secretary of State for the Home Department what changes have taken place in 1974 and 1975 in the procedures for controlled and orderly entry into Great Britain of East African Asians holding United Kingdom passports under special voucher provisions.

Mr. Alexander W. Lyon: My right hon. Friend announced on 6th February 1975—[Vol. 885, c. 1541–3.]—an increase from 3,500 to 5,000 in the annual quota of vouchers. The essentials of the scheme are unchanged, though it is administered with reasonable flexibility.

Mr. Page: Is the Minister satisfied that the rules that are applied are specific enough? If so, are they sufficiently well known to the immigrants who are already here and who have been given original rights to bring in dependants to be fair both to them and to those who now acquire new rights to bring in dependants? There seems to be considerable confusion about the rules that are being applied.

Mr. Lyon: If the right hon. Gentleman will write to me setting out where the element of confusion lies, I shall certainly look into the matter. As I understand it, the administration of this part of our immigration control is carried out with a good deal of flexibility and despatch.

Mr. Sims: In view of the increasing rate of unemployment in this country, particularly among immigrant communities, does the hon. Gentleman believe

that he was wise to increase the voucher quota at this time?

Mr. Lyon: Since the early 1960s both Conservative and Labour Governments have given an assurance to Asian passport holders in East Africa—and it should be recollected that they have the same citizenship as we have—that they will be admitted here if they are not allowed to remain in their country of origin in East Africa. It is because we believe that it is better to get rid of that commitment as soon as possible that we have increased the number of vouchers. However, that does not mean that the total number of those coming in will increase. It means that these people will come in quicker. We hope that the commitment will be fulfilled by the end of this decade.

Mr. Marten: Has the Minister's Department got the mechanics to identify immigrants from the West Indian and Indian Ocean Islands of Martinique, Guadaloupe and Réunion, and separate them? That might be to the benefit of those who approved of the Common Market and yet who object to the immigration of coloured people—because those islands are part of metropolitan France?

Mr. Lyon: So far we do not have that problem, and I hope that we shall not have it. In relation to United Kingdom passport holders, the problem involves a limited number of people in East Africa. That limited number is decreasing fast and we expect it to be zero by the end of this decade.

Shrewsbury Picket

Mr. Skinner: asked the Secretary of State for the Home Department how many letters he has recently received on the matter of Mr. Des Warren's imprisonment.

Mr. Atkinson: asked the Secretary of State for the Home Department how many days imprisonment Mr Des Warren, shop steward and member of the Union of Construction, Allied Trades and Technicians has now served; and what is the average time served prior to parole by a first offender sentenced to a deterrent sentence of three years.

Mr. Roy Jenkins: I have received 60 letters since the beginning of October. Mr. Warren has served a total of 647 days


of his sentence. The other information requested is not available.

Mr. Skinner: I wonder, however, whether my right hon. Friend can tell me what has happened to the argument that was put forward by a majority of Labour Members 12 months ago, to the effect that the sentence was very excessive. Is it possible for my right hon. Friend to display a little bit of that much flaunted liberalism with which he is credited by the trendy media and get Warren out, or is it that political prisoners abroad are the only ones about whom he is concerned?

Mr. Jenkins: As I have made clear time and again, I do not recognise, any more than the British law does, the existence of political prisoners in this country. My hon. Friend's recollection of the view taken by a majority of Labour Members at the end of last year is somewhat different from my own. The view taken, I think, by the majority, at a meeting, was that verdicts and sentences should be determined by the courts and not by the Executive, in the person of the Home Secretary. That has been and remains my position.

Mr. Atkinson: Does my right hon. Friend recollect, however, that Mr. Warren's sentence was for conspiracy to intimidate? Is my right hon. Friend aware that a number of lawyers—some leading lawyers—now suspect the validity of that sentence under the terms of conspiracy to intimidate? As the appeal judge himself remarked upon the excessive nature of the sentence, does it not seem to my right hon. Friend to be almost vindictiveness to say that Mr. Warren must serve beyond the 604 days which my right hon. Friend has now announced?

Mr. Jenkins: The figure was 647 days. No, I think that my hon. Friend will recognise that there are a number of lawyers who can be found to sustain almost any proposition. If I were to intervene in every case in which a number of lawyers took a view different from that of the court which reached the decision, I would indeed be on very shifting sands, while also having a very busy time. I do not think that my hon. Friend's description of the remarks of the judge in the Court of Appeal were entirely correct,

because the Court of Appeal, of course, upheld the sentence.

Mr. Lawrence: Is the Home Secretary aware that if the law on conspiracy were changed, and if the law were changed to the degree that someone who committed the offences of which Des Warren was convicted and to a degree that required the sentence which was imposed upon him, if the law did nothing to provide an offence which would cover that eventuality, the law would indeed be an ass?

Mr. Jenkins: That sounds like a hypothetical as well as a convoluted question.

Oral Answers to Questions — PRIME MINISTER (VISITS)

Mr. Crawford: asked the Prime Minister when he next proposes to pay an official visit to Oslo.

The Prime Minister (Mr. Harold Wilson): I have at present no plans to do so, Sir.

Mr. Crawford: When the Prime Minister does visit Oslo, will he lose no opportunity to inform the Norwegian Prime Minister that with self-government the people of Scotland will be able to emulate the economic achievements of the Norwegians—1 per cent. unemployment, a competitive bank rate, and access to their oil revenues? Does the Prime Minister agree that the people of Scotland could not possibly make a bigger mess of running their economic affairs than this House is doing for them?

The Prime Minister: The hon. Gentleman will know that in preparing our plans for North Sea oil we have drawn considerably on the successful experience of the Norwegians. However, I understood that in the last General Election campaign particularly, the SNP was totally opposed to anything of the kind and wanted to hand over all the profits to private enterprise.

Mr. Jay: Could not the Prime Minister save much of his time and that of the House if he published from time to time a list of all his intended visits?

The Prime Minister: It takes up quite a lot of time of the House to indicate those visits that I shall not be making.

Mr. Rifkind: Will the Prime Minister remind the SNP that in its admiration of all things Norwegian it has forgotten that Norway has conscription to its armed services? Will he ask the SNP to make it clear to the people of Scotland whether an independent Scottish army would be completed by means of conscription?

The Prime Minister: There is no ministerial responsibility for the SNP—and as far as I can see, no other kind of responsibility either.

Mr. Weetch: asked the Prime Minister if he will pay an official visit to Lee.

The Prime Minister: I have at present no plans to do so, Sir.

Mr. Weetch: When my right hon. Friend does have a chance to make a visit, will he visit the Homes Limited property conveyancing association, a firm which, like others, can conveyance property for half the charges of a solicitor's office but which is hounded through the criminal courts for doing so? Knowing that my right hon. Friend is aware that a promise was made in the Labour Party manifesto of 1964 to undertake a fundamental reform of conveyancing, will he please tell me what is the state of that promise now?

The Prime Minister: I am aware of the work of the organisation to which my hon. Friend has referred, but to visit it is not one of my highest current priorities. However, I ask my hon. Friend to await the statement that I hope to make after Question Time.

Mr. Tebbit: Is the Prime Minister aware that the River Lea runs through my constituency and that it is quite near to the town hall? If he visits the town hall at Waltham Forest he will find that the borough council is attempting to force all its employees to join trade unions, under the threat of dismissal, although at the moment fewer than half of them wish to join. Why should the borough council be allowed to jump the gun of his rotten legislation in this way?

The Prime Minister: There is no ministerial responsibility for which river has the misfortune to run through the hon. Gentleman's constituency. I do not think that asking me to go by circuitous routes to places that I was not going to go to

anyway, arises out of the original Question.

Mr. Marten: asked the Prime Minister if he has any plans to visit Copenhagen.

The Prime Minister: I visited Copenhagen on 18th and 19th January to attend the meeting of Socialist Party Leaders at Elsinore. I have no plans at present for a further visit.

Mr. Marten: As the Prime Minister is not going there again, will he have a telephone conversation with the Danish Prime Minister about Mr. Tindemans' conclusion, in his report, that Europe will further its destiny only if it espouses federalism?

The Prime Minister: Perhaps the hon. Gentleman will repeat his Question.

Mr. Marten: Assuming that the Prime Minister telephones the Danish Prime Minister, will he refer to Mr. Tindemans' report, in which it is said that Europe will further its destiny only if it espouses federalism? Does he agree that Britain is utterly opposed to being part of a federal Europe?—[Interruption.] In spite of the Liberal Party, is he aware that many Opposition Members are believing increasingly that direct elections are one step on the road to federalism?

The Prime Minister: I answered the hon. Gentleman's Question, and I mentioned Elsinore hoping for a typical Shakespearean quotation from him, which I was disappointed not to get. The Tindemans Report will come up for discussion at the next meeting of the European Council. In view of the magnitude of the issues raised, I doubt whether we would want to have any definitive or final discussion, but that will be a matter for the Council. As for federalism, I have never been a federalist, and most of my right hon. and hon. Friends have never been federalists.

Mrs. Thatcher: When the Prime Minister next travels to Copenhagen or elsewhere, will he take the opportunity to charter a plane, from Laker Airways, preferably—[Interruption.]

Mr. Speaker: Order. Presumably, if the Prime Minister went to Copenhagen he would have to travel by some means of transport.

Mr. Roy Hughes: On a point of order. Although I have great respect for your decisions, Mr. Speaker, I hope you will appreciate that they give the impression of siding with the Opposition.

Mr. Speaker: I am sure that no personal reflection is intended. I am trying, if I may use an English expression, to play as straight a bat as I can.

Mr. Eldon Griffiths: Further to that point of order, Mr. Speaker. In view of your ruling about the Prime Minister's possible means of locomotion on any visit that he may make to Copenhagen, is it not more likely that he will merely walk upon the water?

Mr. Speaker: The hon. Gentleman has been here too long not to know that that is not a point of order.

Mrs. Thatcher: When the Prime Minister visits Copenhagen or elsewhere, will he charter an aeroplane, from Laker Airways, preferably, with Freddie Laker on board, so that he may hear at first hand of the cheap air services that private enterprise can provide and that the Labour Government are denying to the people?

The Prime Minister: However cheap the service provided by Mr. Freddie Laker, I am sure that he has never had a cheaper commercial than that. The right hon. Lady's memory departs further and further from the collective responsibility of the Government of which she was a part. She must know that in these and in other matters I have totally followed the precedent set by my predecessor, the previous Prime Minister. I have followed the advice that he was given on security grounds—namely, that on such visits I should travel at home and abroad by Service aircraft. That was the advice I was given. If the right hon. Lady regards that advice as wrong, I am surprised that she did not raise the matter when she was a Cabinet Minister.

Oral Answers to Questions — HONOURS LISTS

Mr. Michael McNair-Wilson: asked the Prime Minister whether he is satisfied with the system of the submission by Departments of names for the Honours Lists.

The Prime Minister: Yes, Sir.

Mr. McNair-Wilson: Is the Prime Minister aware of the widespread belief that the present system is too selective and is dominated by Prime Ministerial patronage and departmental lobbying? Does he agree that in the interests of open government it would be a good idea if the system and the way it works were made more public, for all to see.

The Prime Minister: I know that there have been criticisms recently—indeed, in the House—about the use of the honours system for conditioning the votes of Members of Parliament. I have not noticed that. However, I have studied the facts. I find that in the whole of the seven and a half years during which I have been Prime Minister so far, six knighthoods have been conferred on Members of this House—including two from the Chairman's Panel, and of course, the Leader of the Conservative Group at the European Assembly, and my hon. and learned Friend the Member for Warrington (Sir T. Williams) in respect of his IPU work. Six knighthoods have been conferred in the seven and a half years while I have been Prime Minister, as compared with 57 during the last seven and a half years of Conservative government.

Mr. Watkinson: Does my right hon. Friend accept that many Labour Members, at least, will welcome his statement that honours will not be awarded for political or party service? However, does he accept that there may be a place for a more independent approach to the consideration of honours?

The Prime Minister: When I decided, I think in 1966, to stop the system of political honours, I provided that a similar number of honours should be recommended in the case of service to local government, irrespective of party. Although the Conservatives had been in office for 13 years before 1964 and had given a vast number of political honours, after that decision all were decided on their merits, and impartially—and about a third of the honours in respect of local government service went to Conservatives or Liberals.

Oral Answers to Questions — MINISTRY OF DEFENCE (JOB DISPOSAL)

Mr. Teddy Taylor: asked the Prime Minister if he is satisfied with the coordination between the Secretary of State for Defence and the Secretary of State for Scotland in carrying out the Government's policy of facilitating the dispersal of Ministry of Defence jobs to the west of Scotland.

The Prime Minister: Yes, Sir.

Mr. Taylor: Is the Prime Minister aware of the concern in Scotland that the programme is about six months delayed, and that it now seems that it will not be completed until 1984? Will he give us a clear assurance that work will not be further delayed by the Defence Review? Will he give us some indication when work will start on the building of new offices? I point out to the Scottish National Party that if Scotland goes independent these jobs will go back to the South.

The Prime Minister: The Government remain fully committed to complete within 10 years the programme that we have set ourselves, which was announced by my right hon. Friend the Lord President. There have been a number of difficulties with the staff involved about the move to Scotland. I know that the hon. Gentleman is aware of those matters. I happen to share the view of the hon. Gentleman and the former and present Lord Provosts about the great qualities and attractiveness of Glasgow for such work to be established there.

Mr. Roy Hughes: Is my right hon. Friend aware that the decision to disperse Ministry of Defence personnel to Wales smells of jiggery-pokery? Is my right hon. Friend further aware—

Mr. Speaker: Order. A supplementary question must be related to the Question on the Order Paper, which in this instance relates to the dispersal of jobs to the west of Scotland.

Mr. Roy Hughes: My supplementary question was related to the dispersal of Ministry of Defence personnel. I was saying that the decision—

Mr. Speaker: Order. As I understand it, the Question concerns the dispersal of

Ministry of Defence jobs to the west of Scotland.

Mr. Roy Hughes: Will my right hon. Friend conduct an investigation into how the decision has been reached regarding Wales?

The Prime Minister: I naturally bow to your superior knowledge of the geography of Wales, Mr. Speaker. With great humility, I submit that no part of Wales is in the west of Scotland.

Oral Answers to Questions — PRESS (ROYAL COMMISSION)

Mr. Lawson: asked the Prime Minister when he expects to receive the final report of the Royal Commission on the Press.

The Prime Minister: As I informed the hon. Member for Blackpool South (Mr. Blaker) on 5th February, the date of the final report is a matter for the Royal Commission, but I am sure it fully appreciates the need for urgency on reporting on all the issues referred to it. The Royal Commission is aiming to submit its interim report on the immediate problems facing national newspapers by the end of this month.

Mr. Lawson: Despite the habit of the Prime Minister and his entourage of scattering writs like confetti, and whatever may be the state of those writs, will the right hon. Gentleman undertake to present his own evidence to the Royal Commission before it reports? Is the right hon. Gentleman aware—[Interruption.] Three months ago the right hon. Gentleman told the House that he expected—

Mr. Speaker: Order. I could not even hear the question. Has the hon. Member for Blaby (Mr. Lawson) asked his question?

Mr. Lawson: I wanted to ask the Prime Minister, Mr. Speaker, whether he is aware that three months ago he told the House that he expected to present his evidence to the Royal Commission in the very near future. If a week is a long time in politics, how soon is the very near future?

The Prime Minister: I shall treat the opening words of the hon. Gentleman with the contempt with which his questions are increasingly deserving. I have


made it clear that while civil proceedings are continuing—I hope to see them dealt with very quickly, one way or the other—it would be utterly wrong for me to submit my evidence. I intend to publish the evidence as soon as I present it to the Royal Commission. There is no question—I am quite clear about this—of any of the present delay in any way deferring or holding up the work of the Royal Commission, or the presentation of its final report. I understand the sensitivity of the hon. Gentleman and some of his hon. Friends about the subject matter that he has raised.

Mr. Hooley: Does my right hon. Friend agree that a free Press is rather like a sewer, in that it is essential to public health but is bound to stink?

The Prime Minister: I do not accept that a free Press is bound to stink. In answer to a question about the Press on Tuesday I made a comment about a recent matter, by which I stand, but it does not follow that every newspaper is behaving in the way that I was condemning. There is wide support from my right hon. and hon. Friends, and from a number of decent Opposition Members, of whom there are quite a few, for what I said on Tuesday.

Mr. Charles Morrison: Does the right hon. Gentleman consider that television programmes, involving senior journalists, which purport to be, and which probably are, documentaries of events and discussions which have gone on in Cabinet, are a matter of concern and interest which should be referred to the Royal Commission?

The Prime Minister: The hon. Gentleman will be aware that the Royal Commission is concerning itself with the Press and not with broadcasting. The Annan Committee is inquiring into broadcasting. I did not see the programme that I think the hon. Gentleman has in mind, but from what I am told it involved a number of very distinguished actors, who are not members of Equity, and who wrote their own scripts. I am told that neither the acting nor the scripts were very good.

Oral Answers to Questions — ORAL ANSWERS TO QUESTIONS

Mr. Heller: On a point of order, Mr. Speaker. During the course of earlier exchanges, one of my hon. Friends was told that he should not stray beyond the terms of the Question to the Prime Minister. May I appeal to you to consider the situation? If we keep Questions so narrow, the only things we shall be able to deal with are those relating to whether the Prime Minister will visit Oslo, Huyton, Liverpool or elsewhere. Because of the nature of Questions to the Prime Minister, the matter of tabling them obviously raises wider issues. May I appeal to you not to keep these matters so narrow as to prevent the House having a genuine discussion based on the Questions which are tabled? I believe that if we were expected to confine Questions too strictly, we might as well wrap up Prime Minister's Questions.

Mr. Speaker: I am grateful to the hon. Gentleman for the way in which he presented his point of order. I am the servant of the House and I want the House to have its wishes fulfilled. I shall consider the matter raised by the hon. Gentleman and notify the House in due course.

Mr. George Cunningham: Further to that point of order, Mr. Speaker. Will you also consider the Report of the Select Committee in 1971–72 which dealt with the subject of parliamentary Questions? That Committee examined the Prime Minister's part in Question Time and we found it hard to find ways of improving the situation. At that time it was the practice to permit supplementary questions to go as wide as some hon. Members endeavoured to get today. The Select Committee suggested that that practice should continue. However, if it is your wish to start breaking precedent, may I personally assure you that you will have the full support of some hon. Members in breaking some of the precedents in this place, although not perhaps this one?

Mr. Speaker: The House must realise that I regard precedent as my great protection. I intend to follow precedent in the attitude I take. I think that older Members of the House will know that the present custom has developed only


recently. However, I have undertaken to look at the matter, and since we have before us a heavy programme of business, including statements, I hope that we shall quickly conclude points of order.

Mr. Molloy: Further to that point of order, Mr. Speaker. If your endeavours to limit the extent of supplementary questions are aimed at enabling more Back Benchers to ask supplementary questions, will you consider imposing the same strictures on Front Bench as on Back Bench speakers?

Mr. Speaker: Yes, I assure the hon. Member that I shall try to apply the rules fairly and impartially to both sides, and to Front and Back Benches.

Mr. Fairbairn: Further to that point of order, Mr. Speaker. If as a result of your consideration you should come to the conclusion that supplementary questions to the Prime Minister should be restricted to the subject matter contained in the Questions, will you also ensure that the answers are restricted to the subjects contained in the Questions?

Mr. Speaker: By long custom, the occupant of the Chair never takes responsibility for ministerial replies.

Mr. Tebbit: Further to that point of order, Mr. Speaker. It is as well that the House should continue to regard Questions to Ministers as a battle of wits between Ministers and those who question them. May I say that, for my part at least, anything you can do—and, indeed, as you have already done since you have occupied the Chair—to keep Question Time moving fast and the questions addressed to Ministers reasonably relevant, the better, and the more we on the Back Benches can dodge your rulings and get into the heart of Ministers, the better too.

Mr. Speaker: I am grateful to the hon. Gentleman.

LEGAL PROFESSION (ROYAL COMMISSION)

The Prime Minister (Mr. Harold Wilson): Mr. Speaker, with permission, I should like to make a statement.
I have recommended to Her Majesty the Queen that a Royal Commission

should be established with the following terms of reference:
To inquire into the law and practice relating to the provision of legal services in England and Wales and to consider whether any, and if so what, changes are desirable in the public interest in the structure, organisation, training, regulation of and entry to the legal profession, including the arrangements for determining its remuneration, whether from private sources or public funds, and in the rules which prevent persons who are neither barristers nor solicitors from undertaking conveyancing and other legal business on behalf of other persons.
The House will have seen this morning that the Bar Council and the Law Society have issued a joint statement saying that
they would welcome the opportunity to participate in a comprehensive examination of the structure of the profession, its functions, its remuneration and the services it provides".
The Commission will have all the usual powers to call for evidence and information to make inquiries and visits and to submit interim reports.
An announcement will be made in due course about the chairman and membership of the Commission.

Mrs. Thatcher: Is the Prime Minister aware that the joint statement to which he referred also emphasised that the legal profession should remain independent? Does he share that view in setting up the terms of reference? It is a little difficult to judge from the terms of reference whether that is so. Secondly, as the Prime Minister will be aware that it is extremely important that the Commission should command the confidence of both the public and the profession alike, will he undertake wide consultations on its membership?

The Prime Minister: On the last point, yes, certainly. In order that the Commission shall command wide confidence, I am sure that the right hon. Lady, who is a member of the legal profession, will agree that it would be inappropriate to have a lawyer as chairman of the Royal Commission.
The point which the right hon. Lady raised at the beginning, which I do not quite understand, is not in question at all. The whole House recognises the importance of the independence of the legal profession. The particular matters to be inquired into—which I dealt with in considerable detail in the proposed terms of reference—will cover some of those on


which great public anxiety has been expressed about the organisation and practices of the profession.
The right hon. Lady will be aware of the motion on the Order Paper signed by, I think, 111 hon. Members. I cannot recall whether the right hon. Lady signed it. That motion expressed anxieties going far beyond this House. I am happy to feel, as is the right hon. Lady, that the legal profession was among the first to welcome this decision.

Mr. Douglas-Mann: Will my right hon. Friend accept that his announcement will be extremely welcome within the legal profession, but that not all members of the profession would share the view he has just expressed that there should be a lawyer as chairman. Many members of the legal profession would prefer to have a lay chairman. [Interrirption.] If I misheard my right hon. Friend, I shall be very glad to be corrected.
Will my right hon. Friend assure the House that it will be within the scope of the Commission to consider the desirability of setting up a Ministry of Justice to deal with the antiquated and inefficient administration of the courts, for which no Minister is at present answerable in the House?

The Prime Minister: Dealing with the first part of my hon. Friend's question, what I said was that I would not recommend to Her Majesty that a lawyer should be chairman of this particular Commission.
Concerning the question of a Ministry of Justice, this has often been considered in this country and debated in the House. It has been considered by successive Prime Ministers. I would certainly need—as my predecessors would have needed—a great deal of argument to convince me that this would be right. There is, however, nothing in the terms of reference of the Royal Commission to preclude it from commenting on that matter.

Mr. Thorpe: Is the Prime Minister aware that we welcome any Royal Commission which is to examine any profession which has a restriction on terms of entry, whether it be lawyers or dockers, in order to see whether it is in the public interest? Secondly, will the Prime Minister tell us why the Commission's

terms of reference do not extend to Scotland? Thirdly, will it be in order for the Commission to report on whether legal aid should be made more widely available to citizens of this country?
Finally, and simply for the record, can the Prime Minister—he might require notice of this question—tell the House how many Royal Commissions have been set up in the last 10 years, how many of their Reports have been implemented in whole or in part, and how many have been shelved?

The Prime Minister: I am grateful to the right hon. Gentleman. I think it is right—the House has supported it—that we should have a Royal Commission at this time. It is a long time since there were inquiries into those two most distinguished and ancient professions, the doctors and the lawyers. The oldest profession was inquired into by Wolfenden some time earlier.
The question whether a similar inquiry should be held in respect of Scotland, which has its own system of law, as the right hon. Gentleman knows, and the question a Northern Ireland are still under consideration. Legal aid is certainly very clearly within the terms of reference, as the right hon. Gentleman will agree when he has studied what I have said.
As to the number of Royal Commissions, I have actually asked the same question myself. I have had the answer but I cannot remember it. I shall make it my business, if the right hon. Gentleman will put down a Question or write to me about it, to answer it and make the answer publicly available.

Mr. Ashley: Is my right hon. Friend aware that millions of people who have been concerned about the legal profession and the legal services will warmly welcome his statement about the setting up of the Royal Commission and will want to thank him for it? Will he try to ensure, first, not only that the chairman of the Royal Commission should be a lay member but that there should be a majority of lay members, not lawyers?
Secondly, will my right hon. Friend seek to ensure that any urgent legal reforms now being considered by the Lord Chancellor will not be delayed by the Royal Commission?

The Prime Minister: Legal reforms stemming from the work of the Law Commission and those originated by my right hon. and learned Friend the Lord Chancellor will not be impeded in any way by the announcement of the establishment of the Commission. I thank my hon. Friend for the welcome he has given to it.
As to the membership, in my view—I am picking up a point which I may not have fully answered from the Leader of the Opposition—there should be the fullest consultations about the form of membership of the Royal Commission.

Mr. Gordon Wilson: Will the Prime Minister indicate why there is a delay in dealing with the Scottish legal profession, if the matter is still under consideration? Secondly, if the Prime Minister is not prepared to go ahead with a Royal Commission for Scotland at the present time, will he give consideration to providing enough time in the House for the Solicitors' (Scotland) Bill, which seeks to provide lay representation on disciplinary committees?
Will the Prime Minister accept our thanks for not having lumped the Scottish legal profession, which is entirely different from that in England and Wales, into the same Royal Commission?

The Prime Minister: To receive thanks or praise from those Benches is unprecedented, and I am duly moved by it. I explained in answer to a previous question that urgent consideration is being given to the matter of a separate inquiry or whatever might be the appropriate form of procedure in respect of a country with its own distinctive branch of law. As to the other matters raised by the hon. Member, these really are more appropriate for my right hon. Friend the Lord President of the Council, when he deals with business questions today or on some other occasion.

Mr. Christopher Price: Is my right hon. Friend aware that there is considerable suspicion at the alacrity with which the Law Society and the Bar Council have rushed in to welcome the setting up of the Commission? Is he aware that we have seen Commissions come and go in the past, and that many hon. Members on this side of the House will judge the Commission by its membership? Does

my right hon. Friend agree that not only is it important that the Commission should not be packed with lawyers, but that if it is packed with members of the Establishment it will be equally unsatisfactory?
Will my right hon. Friend further agree that we need ordinary working people on the Commission in order to make sure that the law does not continue with the types of restrictive practice that it has at present?

The Prime Minister: My hon. Friend referred to the suspicion which he finds surrounding the statement by the Law Society and the Bar Council. Being totally innocent in this and all other matters, I have no reason whatsover for supporting such suspicion.
I have already answered questions about how the membership of the Commission should be arranged.
Reverting to the point raised by the Leader of the Liberal Party, I am reminded that I answered what is described as a huge Written Question from the right hon. and learned Gentleman the former Attorney-General two weeks ago about the Royal Commissions which have been established in the last 20 years. When the Leader of the Liberal Party has had time to study that very long answer, if he wishes to approach me on any questions I shall be happy to answer them.

Sir T. Kitson: Is the Prime Minister aware that on 23rd October he announced the name of the Chairman of the Royal Commission on Betting and Gaming but that, as yet, we have still not been informed, 15 weeks later, who the members of the Commission are to be? Is there any way of speeding up the appointment and the work of this Royal Commission?

The Prime Minister: Once having announced the decision in principle, it is very difficult to make sure that there are adequate consultations not only with the interests concerned but with "anti-interests" and with people in all parts of the House who may have views about this matter. I am sorry that it has taken so long. I shall get in touch with my right hon. Friend the Home Secretary about this matter. There has been some delay, and I am afraid that it is fairly usual. I


hope that we can proceed with more speed on this occasion.

Mr. English: I take it that the terms of reference of this Royal Commission are wide enough to consider my proposals for an ombudsman to deal with complaints of negligence against solicitors. Will my right hon. Friend also persuade the Exchequer to allow a little more money to the existing ombudsman and persuade the Lord Chancellor to widen his powers within the extent of the present law? It is desirable that the many complaints that we receive—they run into five figures—should be considered even while this Royal Commission is sitting rather than simply waiting for the long processes of the Royal Commission.

The Prime Minister: My hon. Friend's professional qualifications in the law being so much greater than mine, he will have more authority than I do to interpret exactly how the terms of reference might be construed. But this must be a matter for the Royal Commission. It is for the Royal Commission to construe its terms of reference. I see no reason why it should not deal with such issues as those raised by my hon. Friend.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall allow two further supplementary questions on this. Mr. Nicholas Fairbairn.

Mr. Fairbairn: May I declare an interest in that I am a member of a legal profession which is not to be the subject of paranoiac scrutiny in this form? Will the Prime Minister assure the House whether there is any intention to make a similar inquiry of this rather witch-hunting kind into the legal profession in Scotland and, if not, why the cost of this long bureaucratic inquiry should be paid for by the people of Scotland?

The Prime Minister: I am not competent to bandy words with the hon. and learned Gentleman either in legal matters or in paranoia. Dealing with the latter part of his question, I have already answered the point twice, if not three times, when I said that the question of a parallel inquiry or some other form of inquiry in relation to Scotland was being considered urgently. Whatever happens, it will not be paranoiac. The hon. and learned Gentleman's reaction may be.

Mr. Wellbeloved: In view of the widespread concern about the conveyancing side of this question, will my right hon. Friend consider requesting the Commission to give urgent priority to the conveyancing issue and to publish an interim report? Will he also say whether the terms of reference of the Royal Commission allow for consideration to be given to the thorny question of the amalgamation of the two branches of the law?

The Prime Minister: Conveyancing and the present legal monopoly in respect of conveyancing are covered in the terms of reference. I made that clear. I also made it clear that the Commission would have all the usual powers to submit an interim report or reports should that be the position.
With regard to the divorcement, if that is the word, between the two branches—the question whether there are two branches of the profession; if it were not so we would not have had the dual statement welcoming this decision which was issued this morning—it is manifestly clear that that can be considered by the Royal Commission.

Mr. Edward Gardner: Can the Prime Minister say when he anticipates that this new Royal Commission which is about to be appointed is likely to be in a position to make its report?

The Prime Minister: That must be a matter for the Royal Commission. It has been charged with a very, very important task. No one would wish it to rush its report unduly. But, as I have said—and the hon. and learned Gentleman will have heard me—it will be a matter for the Royal Commission to decide, if it finds any subject on which it thinks it urgent to make an interim report or a series of interim reports, to do so.

BUSINESS OF THE HOUSE

Mr. Speaker: Mr. Short. Business Statement.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): The business for next week will be as follows:

MONDAY 16TH FEBRUARY—Until about 7 o'clock, Second Reading of the Road


Traffic (Drivers' Ages and Hours of Work) Bill [Lords], followed by Second Reading of the Fair Employment (Northern Ireland) Bill [Lords].

Motion on the Treatment of Offenders (Northern Ireland) Order.

TUESDAY 17TH FEBRUARY—Until about 7 p.m., motion relating to the proceedings at the end of the Supply debate on Wednesday 11th February.

Second Reading of the Trustee Savings Banks Bill [Lords].

Motion on EEC Documents R/2662/75 and R/2663/75 on nuclear safety.

WEDNESDAY 18TH FEBRUARY—Remaining stages of the Water Charges Bill.

Motion on the Counter-Inflation (Price Code) (Amendment) Order.

THURSDAY 19TH FEBRUARY—Supply [9th Allotted Day]. There will be a debate on the fishing industry, on a motion for the Adjournment of the House.

FRIDAY 20TH FEBRUARY—Private Members' Bills.

MONDAY 23RD FEBRUARY—Supply [10th Allotted Day]: debate on a topic to be announced.

Mrs. Thatcher: May I ask the Leader of the House to say a little more about the motion we shall have on Tuesday relating to last night's business? There are two separate points. The first concerns what the Government intend to do about that motion. The second concerns the attitude of the Cabinet taken at the time and announced from the Dispatch Box. We are well able to find precedents for decisions of the House being varied by later decisions, but we have not been able to find a precedent in which a Cabinet Minister has come to the Dispatch Box wishing it to be recorded that the Government did not accept the decision of the House. As Leader of the House, surely the right hon. Gentleman will not wish that statement, which doubtless was made in he heat of the moment, to stand.

Mr. Short: The effect of the motion passed last night was an expression of opinion that the salary of the Secretary of State for Industry should be cut by £1,000.

Mrs. Thatcher: Of the House.

Mr. Short: It was an expression of opinion of the House, yes. The effects of the motion which I propose to put down on Tuesday will be to give the House an opportunity to restore the position to what it was before last night's motion was passed. [Hon. Members: "Why?"] I understand that the House would want that opportunity.

Mrs. Thatcher: The Leader of the House has not yet answered the second part of my question relating to the statement by a member of the Government that he wished it to be recorded that the Government did not accept the decision that the House had just reached.

Mr. Short: I should have thought that the fact that I had announced a motion to restore the position to what it was before was the reply to that. [Hon. Members: "No."]

Mr. Thorpe: The Leader of the House has been kind enough to offer the House an opportunity to reflect and to reconsider its decision. Are we to take it that this is to be a mutually applicable doctrine which he has enunciated and that, whenever there is a solid body of opinion on one side or the other which happens to disagree, three or four days later we shall have another motion so that we may have a second bite at the cherry?

Mr. Short: I am having enough difficulty in answering questions on business next week without trying to deal with the hypothetical question of the right hon. Gentleman.

Mr. Ian Lloyd: Can the Leader of the House tell us why the Government are reluctant to find time for an urgent debate on events in Angola and South Africa?

Mr. Short: This is simply a matter of shortage of time. I have told the hon. Gentleman that I will bear in mind the question of Southern Africa, and when an opportunity arises we will have a debate in which these matters can be discussed.

Mr. Brittan: Will the Leader of the House accept that there is all the difference in the world between not accepting a decision of the House and asking the House subsequently to alter its decision? Will he not accept that it is constitutionally quite unacceptable for a Cabinet


Minister to say that, while a decision of the House is standing, it is not accepted by the Government?

Mr. Short: I am giving the House an opportunity to reverse its decision. That is my answer to the hon. Gentleman and his right hon. Friend.

Mr. Cledwyn Hughes: Can my right hon. Friend the Leader of the House say when the Green or White Paper report on direct elections to the European Assembly is likely to be published, so that the House may have an opportunity to debate this important subject at an early date?

Mr. Short: The Paper, which will be Green—or a good deal more green than white—will be published next week, though I do not know the exact date. But there will certainly be an opportunity to debate it.

Mr. Thompson: Will the Leader of the House tell us when he will bring forward legislation for Scotland analogous to the Water Charges Bill, so that Scottish ratepayers who do not receive mains sewerage and mains water will not have to pay for these services, as they do at present under legislation of the last Tory Administration?

Mr. Short: I will certainly pass on to my right hon. Friend what the hon. Gentleman has said.

Mr. Hooley: Is my right hon. Friend aware that some of us believe that we should be notified of business at least 10 days ahead instead of only five? Further to that point, we have no information on the subject of the debate to be held on Monday week. I am aware that this is the fault of the Opposition, but will my right hon. Friend make clear that we need proper notice of debates?

Mr. Short: The announcement of the subject for debate on the following Monday week is an innovation which is working reasonably well, but the Opposition cannot give us a subject for that day and we understand that. It is, however, of value to the House to know that it is to be a Supply Day.

Mr. Tebbit: Is the Leader of the House able to tell us whether the House will have as much time to make up its mind on the debate on whether it should

restore the reduction in the salary of the Secretary of State for Energy as we had before hon. Members made up their minds that his salary should be cut? Will there be a full half-day's debate on the matter? Anything less would be inadequate.

Mr. Short: The time for the debate will be exactly the same as the House had yesterday, and the motion will apply itself exactly to the wording of the Opposition's original motion.

Mr. Jessel: Is the Leader of the House aware of Early-Day Motion No. 194, tabled last night, which has already been signed by 100 right hon. and hon. Members, urging the early reintroduction by the Government of the Road Traffic (Seat Belts) Bill?
[That this House, conscious of the experience of other countries, and of the Government's own estimates, believes that the compulsory wearing of seat belts would save at least 1,000 lives and avert 10,000 serious injuries each year, reminds the Government of its undertakings to introduce legislation and urges it to provide time, without further delay, for the Road Traffic (Seat Belts) Bill.]
Does the right hon. Gentleman accept the official figure that this measure would save 1,000 lives a year and prevent 10,000 persons being seriously injured each year? Will he say when the Government are going to act on this?

Mr. Short: I cannot comment upon the figures but I can give the hon. Gentleman a little more hope than previously. I hope that there will be an opportunity in the fairly near future to give the Bill a Second Reading.

Mr. Grocott: May I draw my right hon. Friend's attention to the Early-Day Motion concerning proxy voting for people who are genuinely sick? In the light of the events of the last week, would he not agree that we make ourselves look absolutely ridiculous in the eyes of people outside this Chamber when we wheel in people who are genuinely sick? Does he not agree that if any one of us had in our constituency a factory or an office where that kind of industrial relations obtained, we would consider it absolutely ridiculous? Therefore, may we have a debate on this as soon as possible?
[That this House, appalled by the possible serious danger to the health of a


number of hon. Members occasioned by the irresponsible refusal of the official Opposition to pair sick hon. Members, calls upon the House, as a matter of urgency, to introduce proxy voting for the sick.]

Mr. Short: It is a question of history repeating itself. Exactly the same demand arose in the past when we had to bring sick Members to the House. It culminated one night early in November 1965, when one of my hon. Friends, the then Member for St. Helens, was forced on to the premises by the refusal of the party opposite to pair, and he was brought in unconscious in an ambulance. As a result, the two sides signed an agreement that sick Members would be paired. I signed it as Chief Whip and the right hon. Member for Penrith and The Border (Mr. Whitelaw) signed it on behalf of the Conservative Opposition.
That is an honourable and binding agreement between honourable people, and it is still in existence, but one paragraph in it reads:
in the event of such a breakdown in pairing arrangements, it will be open to the Government to propose the immediate introduction of proxy voting as recommended by the Select Committee on Procedure.
If the party opposite wishes to abrogate this agreement, we shall feel free to look at this question again.

Mr. Stephen Ross: Is the Leader of the House aware that many glasshouse growers are facing almost immediate bankruptcy but that for two years we in this House have never had a proper debate on horticulture? Will he make sure that we get one before it is too late.

Mr. Short: I understand the hon. Gentleman's concern and that of many hon. Members, and I shall certainly bear in mind what he has said.

Mr. Peyton: Is the right hon. Gentleman aware that he has rather sprung the question of pairing on the House in his Business Statement? There is some room for discussion to clear up the position as to the understanding between the present Chief Whips, because it may vary from what the right hon. Gentleman has said.
Is the right hon. Gentleman aware that we shall await with a good deal of interest the terms of the motion we are to debate

on Tuesday? Is he also aware that we shall be very interested during the course of that debate to hear anything from Ministers to sum up their own attitudes to decisions of the House of Commons? We hope that they will take the opportunity to make quite clear that decisions of this House are treated with respect.

Mr. Short: I note what the right hon. Gentleman has said in the second part of his question. I take such decisions very seriously. That is why this motion is being put down. So far as his first point is concerned, this was an agreement signed on 24th November 1965 headed
Memorandum of Agreement between the Government and Opposition Chief Whips as to voting arrangements for sick Members".
As far as we are all aware, that agreement is still in existence.

Mr. Whitelaw: The right hon. Gentleman has thought fit to refer to me, but would it not have been fairer to me to have told me beforehand that he was going to do so? Secondly, while certainly my signature would bind me personally, I do not believe that either the right hon. Gentleman or I—[Interruption.]—can bind two Chief Whips or future Parliaments, particularly since we understand—and perhaps the right hon. Gentleman will confirm—that there has been a subsequent arrangement between the present Chief Whips. In that case, therefore, is it not unreasonable for him to have acted in the way he has?

Mr. Short: No. This reply arose out of a supplementary question. The right hon. Gentleman signed the agreement and it is still in force. Of course, it continues until it is agreed that it should be repealed. We understand that this is an honourable agreement between honourable people, and it should be honoured.

Mr. Thorpe: On a point of order, Mr. Speaker. The right hon. Gentleman has referred to agreements which, it is accepted, were between the official Opposition and the Government, but he spoke of Chief Whips in the plural, which could mean two or three. Can he make perfectly plain, because this is important for the record, that when my Chief Whip offered an arrangement to the Government in respect of my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who was sick but was prepared to be


paired with the hon. Member for Huddersfield, West (Mr. Lomas), who also was sick, it was subsequently accepted by the Government Chief Whip but too late for action to be invoked?

Mr. Short: I do not know about that, but if the right hon. Gentleman says that, I accept what he says. This agreement is headed as being between the Opposition Chief Whip and the Government Chief Whip.

Several Hon. Members: rose—

Mr. Speaker: Order. I think that the Leader of the Liberal Party knew, as the House knew, that what the right hon. Gentleman said was not a point of order. He was making his point in a way which others do but which I do not encourage. May I express the hope that the usual channels will solve this problem between them, because there is—

Mr. Humphrey Atkins: rose—

Mr. Speaker: I will call the right hon. Gentleman. There is a major statement to be made, I understand, by the Chancellor of the Exchequer, and there will be points of order after that before we get to the day's business.

Mr. Atkins: The Leader of the House referred to an agreement made by himself and my right hon. Friend the Member for Penrith and The Border (Mr. Whitelaw) and said that he thought it ought to stay in force until a new one had been entered into. Perhaps I might inform him that a new one has been entered into by myself and the Government Chief Whip.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish): I confess immediately to you, Mr. Speaker, and to the House that the right hon. Member for Spelthorne (Mr. Atkins) informed me that he did not agree with the agreement which had been in force. I had no alternative but to accept the position that he then laid out.

Hon. Members: Withdraw!

Mr. Whitelaw: I have no wish to prolong the proceedings or to exacerbate them, but, in view of what has been said, I think that the Leader of the House owes it to me at least to say

that he has misled the House and, therefore, has been very unfair to me in the process in implying that I—my party—had gone back on my word. That was what he did, and I hone that he will apologise to me.

Hon. Members: Withdraw!

Mr. Short: The Conservative Party refused to pair sick Members for the debate. That is agreed, both on the agreement with the right hon. Member for Penrith and The Border (Mr. Whitelaw) and on the new agreement to which the right hon. Member for Spelthorne (Mr. Atkins) has referred.

Several Hon. Members: rose—

Mr. Speaker: Order. Statement by the Chancellor of the Exchequer.

The Chancellor of the Exchequer (Mr. Denis Healey): rose—

Mr. Fernyhough: On a point of order, Mr. Speaker. Since documents have been referred to but have not been laid on the Table, may I ask my right hon. Friend whether he will publish them to tomorrow's Hansard?

Mr. Speaker: That is not a point of order. [Hon. Members: "It is."] No, it is a question to the Government. We shall always get into difficulties if disagreements between the usual channels are brought to the Floor of the House.

Mr. Wiggin: The Leader of the House raised it.

Mr. Maurice Macmillan: rose—

Mr. Speaker: Order. I am not saying who are the innocent or guilty parties: I am merely saying that I think that the usual channels should settle the matter.

Mr. Ridley: On a point of order, Mr. Speaker. In order to take the heat out of this situation, might I propose, under Standing Order No. 9, that we have a debate on this matter, which is specific, urgent and of public importance? The matters which have just been brought out show that there is a total lack of communication between the Patronage Secretary—

Mr. Speaker: Order. The hon. Gentleman has not yet reached the time when an application under Standing Order No. 9 should be made.

Mr. Maurice Macmillan: Further to the point of order, Mr. Speaker. I seek your guidance in trying to make it plain to the House and, therefore, to the country that whatever agreements there may be between the Front Benches about pairing those who are sick in no way inhibit the rights and duties of all Members of all parties to vote in any debate on any subject in the way in which they see fit, provided it is clear that whatever agreements and pairing arrangements they might privately make are no longer valid for that debate. It would appear to someone listening to recent points of order that the result of any Division can be decided between the two Chief Whips concerned. I am seeking your guidance about the protection of the rights of Back Benchers and minorities. It would be most unfortunate if that impression were left by this interchange.

Mr. Speaker: The right hon. Gentleman is a very experienced Member and am grateful for the way in which he spoke. As he and everyone else knows, officially I know nothing about Whips. As far as I am concerned, hon. Members always vote according to their consciences.

Mr. Cormack: On a point of order. Mr. Speaker. I think that the House could do with some advice on a very different point. It is a very well-established tradition—indeed, a rule of the House—that if, after one has tabled a Question and it has been answered, one goes to the Table Office to table the same Question, it is ruled out of order. The Leader of the House has announced today that the same business will be debated next week as we debated yesterday, the House having made its decision. Could you reflect on this, Mr. Speaker, and give a ruling on Monday?

Mr. Speaker: The difference is that the Government decide the business that they will bring before the House. I think that I am right, although that is an off-the-cuff ruling.

Mrs. Thatcher: On a point of order, Mr. Speaker. You have dealt with this matter as if it were a matter between the two Chief Whips. With respect, it is not now a matter between the two Chief Whips. The Leader of the House has made an allegation against two of my

right hon. Friends about a question of fact which could be easily ascertained. Is it not right that, as Leader of the House, he should withdraw that allegation until the facts have been found?

Mr. Short: So far as the right hon. Member for Penrith and The Border is concerned, if that agreement has been withdrawn and another substituted for it, then of course—I have known the right hon. Gentleman for many years—the last thing I would accuse him of is dishonourable conduct. But out of the mouth of the right hon. Member for Spelthorne (Mr. Atkins) we heard that there was another agreement. That agreement was broken the other night.

Hon. Members: No.

Mr. Speaker: Order. That is certainly not a matter for me. I gather that the right hon. Member for Penrith and The Border (Mr. Whitelaw) is satisfied.

EMPLOYMENT (CHANCELLOR's PROPOSALS)

The Chancellor of the Exchequer (Mr. Denis Healey): Two weeks ago this House debated unemployment and resolved by a very large majority to take "all possible effective measures" to reduce it. In that debate I said that I hoped to present a further set of measures within a few weeks, taking account of proposals by the Manpower Services Commission and by the TUC and of other views expressed inside and outside the House. This I now do.
Wherever possible, the Government have been concerned to ensure that measures to reduce unemployment in the short term shall also reduce constraints on growth and employment in the medium term when recovery reaches its peak. I have therefore examined, with my right hon. Friend the Secretary of State for Industry, the scope for improving our industrial base by further expenditure under Section 8 of the Industry Act on schemes for the modernisation and restructuring of important sectors of industry. The £110 million so far earmarked for such schemes is now largely committed. I therefore propose to allocate a further £55 million for new schemes such as printing machinery and nonferrous foundries, and to make available


further funds for existing schemes, particularly ferrous foundries. Some £15 million to £20 million of this sum will be spent in the next fiscal year.
On a smaller scale, the Development Commission has told me that it could usefully spend £1 million more than the additional sum allocated to it in September last year, for building small factories in rural areas during the next 12 months or so. I am authorising this expenditure since I recognise that unemployment has affected some rural areas with particular severity.
I told the House in the unemployment debate that we were looking at the possibility of further assistance to stock-building to help industry during the recession in fields where it is possible to foresee future demands with reasonable certainty. I am now pleased to be able to tell the House that the National Enterprise Board is discussing with the industry ways of providing finance for the stockpiling of machine tools of types which are expected to be needed during the recovery. The intention is to devise arrangements which will be a good bargain for the National Enterprise Board and for the industry and will help to maintain capacity and provide employment during the remaining months of the recession. I believe that hon. Members will welcome the rôle which the NEB plans to assume in the field of stock-building.
One of the worst-hit sectors in the recession has been the construction industry, although there are signs that demand is beginning to revive in some parts. We have taken steps in the last two years to provide it with some extra work in the public sector. In considering further measures of this nature I have had to make sure that there is no risk of expenditure slipping into future years. when public spending must be contained so as to permit the movement of resources into exports and investment. We have therefore decided to concentrate on the improvement of public sector housing, which can be started quickly and finished before the end of the financial year 1976–77. We propose to provide £50 million for such house improvement, where the effect on employment and the social benefit will be greater than in any other field of construction.
I turn now to the two temporary subsidies for employment which the Government announced last year. The temporary employment subsidy, which was introduced last August for a year, provides £10 a week per worker for six months for an employer who agrees to postpone a redundancy of 25 or more workers. It is now estimated that 55,000 workers will be covered by the scheme. I propose to make two changes.
First, I propose to extend the length of the period of payment. The first firms to use it will very soon exhaust their six months' entitlement. The maximum period of entitlement will therefore be extended from six to 12 months. This means that the 55,000 jobs affected may be preserved for a further period beyond six months. Secondly, I propose to reduce the minimum size of a qualifying redundancy again, from 25 to 10 workers. This is estimated to bring a further 3,000 or so workers within the scope of the scheme.
The gross Exchequer cost of extending the period of payment to 12 months is estimated at £14½ million and the cost of reducing the minimum qualifying redundancy at £1½ million. But there will be savings in unemployment benefit and gains in national insurance contributions and income tax. These will depend on the circumstances of the workers covered by the subsidy, but in aggregate they are likely to mean that the subsidy will have little or no net effect on the public sector borrowing requirement.
Next, I come to the recruitment subsidy for school leavers, through which employers who recruit unemployed school leavers receive £5 per recruit per week for 26 weeks. The scheme is at present limited to those who left school last summer or before, but I propose that it should now be extended to those who left at Christmas 1975. The cost of this will be about £250,000.
The Manpower Services Commission has been considering what more it could do to employ and train those who would otherwise be out of work. It has proposed an extension to its scheme for job creation. So far £40 million has been allocated to this programme, which should provide 30,000 to 35,000 jobs. If proposals continue to come in at the present rate, the whole of that £40 million will have been pre-empted by bids


received by about the end of April and approved by the end of June. The scheme would thus begin to taper off in the autumn, just when there is a particular need to provide extra jobs for those of next summer's school leavers who fail to find other work. Therefore, we have decided to allocate a further £30 million to the programme, as the Commission proposed, to keep it going at peak level until the end of the year. We shall neeed to consider before then, in the light of the latest prospects for employment, how quickly the scheme should be tapered off in the early months of 1977. This extension should permit the creation of some 20,000 to 25,000 extra temporary jobs. The net effect on the public sector borrowing requirement will be small.
These are measures to maintain or create extra jobs while unemployment remains high. I am convinced that they are both necessary and cost-effective for this purpose. But as well as these measures to provide jobs in the immediate future, we must do everything possible to build up the scarce skills which will be in demand when the economy is running nearer to full capacity. The Manpower Services Commission has put forward proposals to provide, from next August, some 30,000 to 35,000 extra training places in industry, at a cost of approximately £55 million. About £45 million of this applies to new first-year apprentice training and the rest to second-year apprentices and to other measures, including schemes for non-craft training of the kind that the engineering industry is considering. Again, the Exchequer cost of this is very largely offset by the savings on benefits for the unemployed, and this expenditure will be a valuable addition to the effort which is already going into providing training in industry.
First-year apprenticeship grants will be available to employers who take on extra apprentices under arrangements to be worked out by the industrial training boards in consultation with the Training Services Agency. I greatly welcome the speed with which the Manpower Services Commission has reacted to current needs, and I am glad to be able to accept these proposals in full.
I know that the whole House is concerned that we should do everything possible to avoid the demoralising effect of long periods out of work on young

people just out of school. The further education system should also have a rôle to play in this field. Therefore, I shall be considering with my right hon. Friends the Secretaries of State for Education and Employment what more can be done to make the best use of the further education system for this purpose during the recession.
My right hon. Friend the Secretary of State for Northern Ireland will be announcing the details of a comparable set of measures costing £8 million, of which about £5 million will be spent in 1976–77.
The estimated total cost of all these measures is about £220 million. But less than £140 million of this will be spent during the coming financial year. The large items of expenditure on training and on industry schemes are phased over the next two or three financial years because training is organised by academic years, and industry schemes are partly financed by interest-relief grants spread over a period. In both cases, however, most of their real effect on employment will be felt in the coming year.
Because of the offsets which I have mentioned earlier, the net cost to the public finances is likely to be less than half of the gross cost, or about £60 million, in 1976–77. Altogether, the measures are likely to provide about 140,000 jobs or training places—though not all these jobs will last as long as a year and some may be at the expense of other jobs. Over the coming financial year the net effect on employment should be about half that figure.
I am convinced that this set of measures is the most cost-effective way of providing more jobs as quickly as possible and of improving our industrial capacity without a general reflation of domestic demand, which is widely recognised to be inappropriate at this time, and within the limits on public spending which we must respect if we are to achieve stable prices and steady growth in the upturn. I shall, of course, want to consider in my Budget whether by then there is scope for doing more along the same lines.

Sir G. Howe: I commend the Chancellor for having accepted the advice repeatedly offered to him from this side of the House to resist any demands for movement towards general reflation, and


I ask him for his assurance that he will sustain his will in that respect through the long and testing times that are still to come. I welcome particularly the sums devoted to improvement of facilities for training and retraining.
May I ask the right hon. Gentleman to tell the House the net cost to public funds, taking into account the figure he quoted of £60 million net in the coming year, of all measures of this kind that he has announced since his Budget Statement last year?
Will the right hon. Gentleman join me in repudiating the suggestion in a Labour Party policy document published today to the effect that reflation would in any way be rendered more acceptable if it were accompanied by import controls? Does he agree that that would be a disastrous prescription?
Can the right hon. Gentleman tell us what is the total number of jobs actually saved or created by all the measures he has announced since his last Budget? When he spoke to the House in December, he listed the actual number of jobs saved or created—I think the total came to about 14,000—as opposed to the potential. What is the number actually saved or created—as he would have it—by his measures up to the present time?
Does not the right hon. Gentleman agree that, whatever that figure may be, it will be far smaller than the number of jobs destroyed by the policies operated by the Government since they took office, by huge increases of £25 billion in public spending, by the tax burden which has been imposed to sustain it, by the multi-rate value added tax, by nationalisation and by the measure on which the House voted on Tuesday—the Dock Work Regulation Bill—since all these are measure which are destroying jobs and for which so-called moderate Members on the Government side continue to vote?

Mr. Healey: I am grateful to the right hon. and learned Gentleman—I suppose I should be. Long before the Opposition were lecturing us on this matter, however, I was asked by the TUC and the Labour Party conference to resist general reflation at this time.
Since the Budget last year, the net cost to public funds in the coming financial

year should be about £100 million, but if the right hon. and learned Gentleman will put down a specific Question, relating it to a particular time scale, I shall seek to give him a more accurate answer.
On the question of import controls, as I told the House in the debate two weeks ago, in our judgment these could not be introduced by the Government on the scale recommended in some quarters without massive retaliation by our trading partners, which could well lead to a world trade war, and there is no possibility that such measures would increase employment on the scale sometimes suggested within the next year or so.
The right hon. and learned Gentleman asked for the total number of jobs created or saved by Government measures since the last Budget. Again, the measures I have announced since the last Budget will ultimately save about 150,000 jobs. The precise number saved so far net, for reasons I have explained in earlier debates, is extremely difficult to calculate at any single point in time.
I must say that the right hon. and learned Gentleman's suggestion that unemployment in Great Britain in the last year has been increased by the Government's spending programme is the literal opposite of the truth. On the contrary, without public spending on the scale that the Government have maintained, unemployment would have been very much higher. The House will be astonished by what the right hon. and learned Gentleman has just said, since we all know that only three weeks ago, on 22nd January, he asked for immediate cuts in public spending and confessed, for the first time, that that would mean substantial increases in unemployment in the short term.

Mr. Atkinson: Is my right hon. Friend aware that a great deal of satisfaction will be gained among machine-tool makers at his announcement, except that there will be some surprise that he has not outlined the guidelines which he has put before the National Enterprise Board and that he has made no mention of the figures involved? However, does he not accept that stockpiling should be extended far beyond machine tools and should involve heavy engineering and the re-equipment of the country if it is his purpose to re-tool the whole economy? Is my right hon. Friend further aware that


the very small and puff-like will-o-the-wisp announcements which he has made today will not go anywhere near far enough towards safeguarding the jobs which he has undertaken to the House to do?

Mr. Healey: I think that my hon. Friend is in some confusion as to whether to congratulate or condemn me. On the question of stockpiling, the details of the National Enterprise Board's scheme are being discussed with the industry and the Department, but the total sum committed is likely to be about £5 million. In the last debate I announced help from the Government for stockpiling steel, which is the most critical element in the whole future of our industry. We gave about £70 million for this. Last year I also announced stockbuilding by the National Coal Board to the extent, I believe, of over £100 million. My right hon. Friend the Secretary of State for Industry is already discussing with other industries the possibility of extending the scone of such stockbuilding schemes.

Mr. Peter Walker: Is the right hon. Gentleman aware that in the construction industry, which has 211,000 unemployed, the £50 million—plus improvement grants will provide only 8,000 jobs and that the grants will still be only half the rate they were two years ago? Is he further aware that there will be great disappointment in the West Midlands that it seemingly continues to be discriminated against, despite the trivial amount of assistance it has received in the last two years? Is he also aware that there is about £1,300 million in deferred tax in the industry as a result of his stock appreciation provisions, and that the release of that money for investment would have been a major injection into the economy?

Mr. Healey: The right hon. Gentleman has his own experience of packages to deal with unemployment in the construction industry. I examined very carefully what he did. I discovered that his plans for stimulating the construction industry were drawn up so unwisely that there was a slippage of £120 million from the second year into the third year and of £40 million from the third year into the fourth year, while the way in which he carried out his plans contributed both to the seizure of the economy in 1973 and to the gross inflation of housing and

construction prices in that same year. I believe that the Government were right to concentrate on construction schemes which would have an immediate and direct effect of a very large scale, both on employment and on the welfare of those living in public sector housing.

Mr. Pardoe: I remind the right hon. Gentleman that two weeks ago this House called for all possible effective measures to reduce unemployment, that it is still waiting to hear those measures, and that 70,000 extra jobs in the coming financial year falls far short of what the House called for in that debate. Will he now say that he recognises at last that waiting, as his strategy is, for a world upturn to put the British people back to work is no longer credible? Will he enter into urgent negotiations with the trade unions to provide a really effective package for job creation and selective reflation, as well as a much tougher incomes policy from next August?

Mr. Healey: The hon. Gentleman asks so many times for so many things with such increasing stridency that I am sometimes at a loss to know what he is asking for. I do not blame him for his recent increase in stridency. We all know what lies behind that.
The measures that I have announced at this time will all contribute directly to increases in jobs in the immediate future. Measures of reflation—if by that the hon. Gentleman means reflation of domestic demand—cannot be expected to increase employment for at least 12 months.

Mr. Noble: My right hon. Friend has said that he will take all effective measures. Perhaps he recalls that before Christmas he announced a package when he said that he would preserve existing viable industrial capacity. Is he aware of the increase in unemployment, particularly in the North-West and in the areas dependent on traditional industries? Is he further aware that deflation in the economy at the moment is not only damaging our domestic industry but, while restricting exports, nevertheless allowing an increasing penetration of imports? Will he now listen to the TUC, which is a cornerstone of his policy, when it demands selective import controls immediately in order to preserve jobs?

Mr. Healey: Unfortunately, unemployment is still increasing in Britain, but it has been increasing faster in recent months in Japan, Denmark and France, and the percentage of the working population out of work is very much higher at this moment in the United States, Germany, France and Denmark than it is here. It is still rising very fast in Germany and France. My hon. Friend must accept the fact that the whole world at the moment is in the grip of the worst recession since the war, partly because, I think, far too many Governments, unlike the United Kingdom Government, underestimated the deflationary effects of the massive increase in oil prices a few years ago.
My hon. Friend can be assured, however, that there are many signs, to which I referred in the last debate, that the upturn has come in many countries. The recession has certainly bottomed out in the United Kingdom, and this is accepted as much by the CBI and the TUC as it is by the Government. It would be a disaster for the Government to repeat the mistake of the Conservative Administration in 1971 of ill-considered reflation. That produced the greatest distortions our economy has ever known and an inheritance from which the Government are only just rescuing the British people.

Mr. Donald Stewart: Does the Chancellor accept that any measures to alleviate unemployment are welcome but that those which he has announced are far too derisory to make an immediate impact on the problem? Will the right hon. Gentleman consider raising grants for retraining since 40 per cent. of school leavers in Scotland are going into unskilled jobs? Will he consider making an increase in the amount put out for the construction industry, since there is bad housing and there is unemployment in the industry and such a move would assist beyond the contribution which has already been made?

Mr. Healey: I am well aware of the special problems faced in many parts of Scotland, although the hon. Member will know that the current recession has hit Scotland a great deal less hard than it has hit many other parts of the country. That is a tribute to much of the work by successive British Governments in helping the regional development of Scotland. As for the precise level of grant

for training, all our experience is that this is not a major factor inhibiting the take-up of training places. We have doubled the amount of training in the last two years, and I hope that both sides of the House will be grateful for that. However, the speed at which training can be increased depends on a large number of factors, and payment to those who accept training is only one method.

Mr. Heffer: Will my right hon. Friend accept from me that this package is much better than some of us expected, but that on the other hand it is quite clear that it will not be enough seriously to begin to deal with our problems? Will he again reconsider his attitude towards import controls? Even with what he has already done for the construction industry, this is not good enough. I hope that my right hon. Friend will continue to take into consideration what is said by Labour Back Benchers, by the TUC and by the Labour movement in the country.

Mr. Healey: I am immensely grateful to my hon. Friend. In saying what he has said he reflects the view of many who, like himself, criticise my general policies. I do not complain on that score. However, I have gone as far as I sensibly and effectively can go at this time with this type of selective measure.
Only selective measures are likely to affect the level of employment in the short term. The argument about what sort of measures should be taken to effect employment in the medium term—after 12 months and in the following years—will be the subject of debate for a very long time.
However, I hope that my hon. Friend will bear in mind the warning I gave in my speech a fortnight ago that the sort of import controls that the officials of one of our political parties—if we are to believe the Press—are recommending—

Mr. Prior: It is the Labour Party. The Chancellor should say what he means.

Mr. Healey: Of course I meant the Labour Party National Executive. The right hon. Gentleman would do himself and others a great service by sometimes keeping his mouth shut, although I shall not refer to him in the same terms as my hon. Friend the Member for Derby, North (Mr. Whitehead) used.
I understand the points that are put, but I ask my hon. Friend to appreciate that import controls on the scale recommended by junior officials at Transport House would certainly lead to massive retaliations, from which world trade would suffer, and the poorer countries would suffer most of all. The calculation that I have seen them quoted in the newspapers as making, about the effect on employment, is grossly exaggerated.

Mr. Maurice Macmillan: I join in the general congratulations to the Chancellor for producing some reasonable looking bricks out of the small amount of straw available to him. Will he assure us that the new training proposals will not in any way be at the expense of retraining, including retraining of older men in new skills and young people who are already in work? In view of that, will he do everything he can to encourage employers to release young people for vocational and general education?
Will the right hon. Gentleman consider making at least some of the help he is giving to the construction industry available for public sector housing, to be used to help labour mobility? As he knows, the difficulty in getting people to move is finding them somewhere to live.
Will the right hon. Gentleman look carefully at the potential conflict between his measures to postpone redundancy and the measures he announced, at the beginning of his statement, to modernise equipment—he quoted the example of printing machinery? Ts he aware that there is no point in modernising printing machinery if the present gross scales of overmanning are to continue, because that will merely mean that the machinery will be unused and the orders will go abroad?

Mr. Healey: I welcome what the right hon. Gentleman said in the first part of his intervention. I assure him that none of the training measures announced today or on earlier occasions will be at the expense of training young people in work, or training older people. I agree very strongly that it would be highly desirable if employers would agree to release young people in work either by the day or for longer periods, in order to improve their professional qualifications.
I strongly agree with the right hon. Gentleman about the mobility of labour and the relevance to this of public sector

housing. In my last package I included a mobility allowance in order to assist in this respect.
On the question of printing machinery, I accept that there are problems of overmanning in this industry. However, they are largely confined to Fleet Street and London and are infinitely less serious in other parts of the country. That is certainly the case in the West Riding, which is where my constituency is situated. However, there is a real problem about antiquated printing machinery in some parts of the country, including my constituency. Some important firms with a valuable past have found themselves faced with serious financial problems because they are not at the moment producing modern equipment for sale not only in Britain but abroad. The measures I have announced will help substantially to improve the export prospects as well as the domestic prospects of the industry.

Several Hon. Members: rose—

Mr. Speaker: Order. May I appeal to the House? I want to call several more hon. Members, but I ask them to be brief, because a lot of business is still to follow.

Mr. Michael McGuire: I weclome my right hon. Friend's announcement, although I do not believe that it will do a great deal of good for my constituency. No town in England has felt the cruel lash of unemployment more than Skelmersdale, and in view of our desperate need of a hospital there will my right hon. Friend say whether his proposals for building in the public sector can be extended to building a hospital in Skelmersdale? A big project like that generates more capital and employment than does the building of a number of separate houses.

Mr. Healey: I welcome the spirit in which my hon. Friend has commented. I know that unemployment in Skelmersdale, particularly because of recent events, is as high as in any other town in the country. I did not feel able to allocate more money for hospital building because, first, it is not possible to build a hospital within a year and, secondly, the building of a hospital is attended by continuing current expenditure over many years. I was most concerned about construction work and concentrated


such money as I felt was available on housing, which is extremely labour-intensive, can be started tomorrow, and can be finished before the time that we expect unemployment to return to normal. The need to free resources for export and investment is paramount.

Sir P. Bryan: Is the right hon. Gentleman aware that the job creation programme is getting off to a very slow start? Is he further aware that Humberside County Council submitted an application for 44 jobs in October and has only just had it approved? Does that not justify the complaints of the Chairman of the Manpower Services Commission, Sir Denis Barnes, about the slowness with which the Government reacted to the plans for job creation put forward by the Commission at the end of 1974?

Mr. Healey: My right hon. Friend will look into any specific complaints about the programme and I am sure he will consider the point raised by the hon. Member if he is given the details. Applications for job creation schemes were slow to come in, but there is a very large number now before the Manpower Services Commission and the Department of Employment. The money I have so far made available looks like being committed to schemes for which application has already been made. That is why I am increasing the scale of the programme by £30 million, to keep it flowing steadily through to the end of the year.

Mrs. Hart: I welcome my right hon. Friend's commitment to what is essentially no more than marginal short-term assistance to the unemployment problem, but is he aware that I am a little disturbed by his answer to my hon. Friend the Member for Tottenham (Mr. Atkinson) about the amount to be devoted to stock-building? Is he aware that stockbuilding can not only make a great contribution towards resolving the unemployment problem but can also prepare the way for export success when the upturn comes? Is he aware that the £5 million given to the National Enterprise Board is utterly inadequate and that we would like the figure to be much higher? Does my right hon. Friend realise that the paper, which has unfortunately been the subject of a great deal of Press comment today, has considerable economic authority

behind it and that it would be wiser for him not to refer to it as just a paper produced by junior officials at Transport House? Will he refrain from closing his mind, in terms of a medium-term strategy, to the question of import controls and accept that there are two arguments about retaliation? Does he accept that in terms of creating employment as a result of a recovery, import controls might well be absolutely essential?

Mr. Healey: I am grateful for the welcome that my right hon. Friend has given to the measures. She is quite right in saying that they will affect employment only in the short term and that their effect will be marginal in relation to the size of unemployment, which we all deplore. However, no other sort of measure can affect employment in the short term. In the medium term—12 months and more ahead—we face a very difficult set of problems, but I believe we can rely on the upturn in world trade to affect employment in the medium term. We have certainly seen an end of destocking and there are some signs of a recovery in stockbuilding. All the surveys suggest that investment, if it does not pick up this year—though some plans may be brought forward—will pick up next year. The question of other action needs to be judged in the light of the disastrous experience of the last Conservative Government, who acted on far too large a scale at the wrong time. We are looking at the possibility of further action in connection with stockbuilding.
As for machine tools, my right hon. Friend will be aware that we have already committed £25 million to a restructuring of the machine tool industry, which will also benefit from other schemes in engineering, such as those for ferrous and non-ferrous foundries and for printing machinery. The NEB Stockbuilding scheme is only one element of the assistance to this industry. There has also, of course, been the transfer of ownership of Alfred Herbert's, which was collapsing under private control. On my right hon. Friend's last point, I shall never close my mind to anything, but, as an American politician once said, one should never keep one's mind too open, otherwise a lot of rubbish will be drawn into it.

Mr. Norman Lamont: Is the right hon. Gentleman aware that we firmly support


his resistance to general inflation, but is it not thereby the clearer that these measures will have a very limited effect, because goods cannot be produced without a market and we cannot produce machine tools to produce machine tools to produce machine tools? Is not the real purpose of these measures to prevent an illiterate Secretary of State for Employment from resigning from the Cabinet?

Mr. Healey: The hon. Member's tedious and offensive remarks are quite out of keeping with the general tone of the discussion on these measures. The saving of 70,000 jobs may be a matter of no consequence to the hon. Member but it will be of very great consequence to the 70,000 people who would otherwise be suffering the demoralisation and humiliation of living on the dole.

Mr. MacFarquhar: Does my right hon. Friend agree that the demoralisation to which he has just referred is particularly high not only among school leavers, but also among men aged over 50, who may see no prospect of any further job? Will he consider measures of financial assistance to firms prepared to take on workers in their fifties who have been through a retraining programme?

Mr. Healey: I recognise that the problem of unemployment bears very heavily on people in every age group and in every sort of situation. It has been generally felt by the House that if priority has to be given anywhere it must be given to young people who, if they find themselves without a job for many months or even years after leaving school, may find their propensity for work damaged for life. It was right for that to be our priority.

Mr. Anthony Grant: Is the right hon. Gentleman aware that it is absolutely no comfort or consolation to someone unemployed in this country merely to be told that there are more people out of work in Japan and West Germany? Is he aware that in the last 16 months, unemployment has risen by 97 per cent. in development areas and by 118 per cent. in intermediate areas, while in the non-assisted area of London and the South-East it has increased by a disgraceful 159 per cent? Do these figures not indicate that it is necessary to have a completely fresh look at our whole

regional policy, in order to encourage mobility?

Mr. Healey: In a rather bizarre and unwelcome way, the figures just quoted by the hon. Member show that the regional policy is working. The impact of unemployment is no longer distributed in the old development areas to the degree that it used to be. I somewhat resent being lectured by the hon. Member about increased unemployment when every policy for which he has voted in the past year would lead to increased unemployment, as the Shadow Chancellor of the Exchequer finally admitted in a speech a fortnight ago.

Mr. Cryer: Will my right hon. Friend accept a welcome from the Government Benches for the £50 million to improve public sector housing? But what is he doing towards research and development? Is he aware that there is no indigenous television tube industry in this country? All the firms are multinationals. Surely, while we are awaiting the upturn, we should develop our own technology and not rely on imports. Is my right hon. Friend aware that the notion of selective import controls is not rubbish—I am sure he did not mean to say that—and does he not consider that as Socialists, wanting to control the economy in a Socialist way, we cannot depend on the free market entry of imports and controlling the economy internally? I advise him that he is far more likely to receive rubbish from the City than from a Labour Party pamphlet.

Mr. Healey: I would not seek to distinguish the precedents in the area to which my hon. Friend referred, but I am glad that he welcomes the construction measures. On the question of import controls and Socialism, there is in some circumstances a case for import controls, and we introduced two selective import controls in the packet in December. But no Socialist would regard it as Socialist policy to export unemployment. At a time when all countries are suffering from heavy unemployment, the risk that an attempt to restrict trade in this country alone to protect employment might be seen as exporting unemployment and lead to retaliation is a very real one. One can see that by the reaction in the EEC to the recent suggestion of import controls in Sweden.

Mr. Prior: I should like to press the Chancellor on his overseas comparisons. Is he aware that publications by the Department of Employment on 29th January and 10th February show that in the year-on-year figures Britain has a greater percentage increase in unemployment than has any other country, that on the three-monthly figures only Japan has a greater percentage increase in unemployment, and, according to the most up-to-date EEC figures, the only country which has a greater increase is Luxembourg, where the figures went up from 144 to 609? Does not the Chancellor understand, as my hon. Friend the Member for Harrow, Central (Mr. Grant) said, that it is little consolation when the figures for other countries are quoted, but it is no consolation when those figures are quoted wrongly and the people at home are misled by the right hon. Gentleman's figures?

Mr. Healey: The right hon. Gentleman accurately stated the facts in the earlier part of his question but in his final remarks he perpetrated an act to which I am not allowed to refer in Parliament. I can perhaps refer to it as a terminological inexactitude.
It is true that unemployment over the past 12 months has risen faster in Britain than it has in other countries. Nevertheless, in the past three months it has risen faster in Japan and Denmark, and at about the same speed in France. In the last month unemployment rose at least as fast in Germany and France, and, according to French predictions, is likely to continue rising in France through the year. The important aspect is that the level of unemployment is much higher in the United States, Germany and France than it is here at this time, and that in the United States, which has followed the monetary policies currently fashionable on the Opposition Front Bench, it is not expected to fall to the current level in Britain before the end of the decade.

Several Hon. Members: rose—

Mr. Speaker: Order. We must get on. Mr. Gow, on a point of order.

QUESTIONS TO MINISTERS

Mr. Gow: On a point of order, Mr. Speaker. I rise to seek your guidance on a matter affecting the rights of Back Benchers and the tabling of Questions to Ministers and their answers. On 5th November the Minister of State, Treasury, in a Written Answer to me, stated that the salary of one of the special advisers to the Chancellor of the Exchequer—Professor Lord Kaldor—was £14,000 a year. In an oral answer to me on 11th December last the Prime Minister stated that the total cost of the special advisers at No. 10 Downing Street paid for out of public funds was approximately £43,000 a year.
I have since tabled Questions to various members of the Government, and I received from the Secretary of State for Energy, in answer to a Question about the cost of special advisers in his Department, the following Written Answer:
It is not the practice to specify, either individually or in total, the salaries of special advisers appointed to serve in a particular Department".—{Official Report, 10th February, 1975; Vol. 905, c. 144.]
In view of the previous answers when the individual salary of Lord Kaldor and the total salaries of those employed at No. 10 Downing Street were given to me, it is manifestly not correct to say that it is not the practice to give that information.
Further, Mr. Speaker, as civil servants' salaries are within the legitimate area of ministerial responsibility, and as special advisers are, on the Government's admission, employed as civil servants, is it not legitimate for Back Benchers to ask questions about the salaries of civil servants, and is it not a defiance of the rights of Back Benchers for Ministers to refuse to answer those questions? Is it not also the duty of Back Benchers to scrutinise the Executive and, above all, to be the guardians of public expenditure? Will you advise us, please, Mr. Speaker, how we should fulfil our traditional role as scrutineers in this regard?

Mr. Speaker: I am very much obliged to the hon. Gentleman for giving me notice of the point of order he wished to raise. I fear that I have to rule, as my predecessors have ruled many times, that the content of ministerial answers is not a matter over which the Chair has any


control. No doubt notice of what the hon. Gentleman said will have been taken by those concerned.

Mr. Burden: Further to that point of order, Mr. Speaker. Would it not be desirable for a Select Committee of the House to go into the question of what should be disclosed by Government and what should not? This is an important matter, which affects the whole country, and it should be given mature consideration in the absence of Government control.

Mr. Speaker: I am sure that those responsible will take note of the hon. Gentleman's words. I do not know, but it might be a matter for the Select Committee on Procedure.

STANDING COMMITTEES (REFERENCE TO PROCEEDINGS)

Mr. Hal Miller: On a point of order, Mr. Speaker. I should be grateful if you would guide me as to the admissibility, in debate in the House, of a reference to proceedings in Standing Committee. Last night the Minister of State, Department of Industry, when making his winding-up speech, referred to proceedings in Committee. He dealt with the content of the matters there being debated and commented on the arguments taking place on an amendment that had been moved, the arguments put forward in support of the amendment, those who supported it and the result of the vote. He went on to comment on the reasons that might have led hon. Members to speak for or vote on the amendment.
I should be grateful if you could help the House by giving your guidance on the extent to which such references to Committee debates are admissible.

Mr. Speaker: I am grateful also to the hon. Member for Bromsgrove and Redditch (Mr. Miller) for giving me notice of his point of order and for the courteous way in which he has returned to the matter, which he raised last night when the House was a little excited. I think that that is within his memory, as it certainly is within mine.
References to proceedings in Standing Committee before the Committee has reported are not wholly out of order. The House will recall that on 16th April last my predecessor had occasion to make a considered ruling on the matter. He gave a number of instances which, in his view, fell on the right side of the line. One of those was a reference to the attitude of Government supporters on the Committee. It seemed to me that the Minister last night was making similar references to the attitude of Opposition Members of the Committee. For this reason, I take the view that he also was just on the right side of the line, but only just.
I should like, however, to repeat the wise words of my immediate predecessor, which were used at the conclusion of his ruling and which, I hope, the House will bear in mind. He said:
My conclusion is that, before Standing Committees have reported, the Chair should strongly deprecate references in the House to what has been going on in them. We already have quite enough to argue about on the Floor of the House.
But I do not think that I can make the rule absolute. Nevertheless, I hope that common sense will prevail in the House's interpretation of my Ruling, and that the time of the House will not be unreasonably taken up by such matters."—[Official Report, 16th April 1975 ; Vol. 890, c. 444.]
I am most grateful to the hon. Member for Bromsgrove and Redditch for raising this point of order so early in my experience in the Chair. I hope that the House will bear in mind the ruling that has been given.

Mr. Hal Miller: Further to your ruling, Mr. Speaker, for which I am most grateful, I should like to assure you that I would not have raised it or taken up the time of the House if it had not occurred to me that some of the Minister's remarks had gone rather beyond describing the attitude of supporters and opponents and had gone, indeed, to the heart of the matter being debated in the Standing Committee. That was my reason for raising it. However, I am most grateful to you, Mr. Speaker, for your ruling.

Mr. Speaker: It might well have been that I should have been sterner last night, but the future is a long time, I hope.

BILL PRESENTED

LOCAL GOVERNMENT (MISCELLANEOUS PROVISIONS)

Mr. Secretary Crosland, supported by Mr. Secretary John Morris, Mr. John Silkin, Mr. Attorney-General and Mr. Gordon Oakes, presented a Bill to make amendments for England and Wales of provisions of the law which relates to local authorities or highways and is commonly amended by local Acts; to alter certain supplemental provisions of the enactments relating to public health; to provide for certain powers of local authorities to execute works to be exercisable outside their areas; to provide for certain future local enactments and orders to have effect subject to certain other enactments; and for purposes connected with the matters aforesaid: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 62].

BUSINESS OF THE HOUSE

Ordered,
That, at this day's Sitting, Mr Speaker shall put any Question necessary to dispose of Proceedings on the Water Charges Bill not later than half-past Seven o'clock.—[Mr. David Stoddart.]

Orders of the Day — WATER CHARGES BILL

Order for Second Reading read.

5.12 p.m.

The Minister of State, Department of the Environment (Mr. Denis Howell): I beg to move, That the Bill be now read a Second time.
I should explain to the House, although it is probably within the recent memory and knowledge of most hon. Members, that the Bill arises from a House of Lords ruling last December in what has become known as the Daymond case. It is concerned only with the direct effects of that ruling. We are not concerned with any of the wider questions that arise from the 1973 Water Act, on which the Government will publish a consultation paper in the next few weeks. This Bill is not the vehicle for any change in the present system.
The decision in the Daymond case was that the 1973 Water Act does not permit any charge for sewerage and sewage disposal to be levied on a property which is not connected to a public sewer. The Water Authorities (Collection of Charges) Orders 1974 and 1975 were, therefore, ultra vires to the extent that they purported to authorise sewerage charges to unconnected properties. It must follow from that that all such charges made in the financial years 1974–75 and 1975–76 were illegal. That is the situation that we have to consider and which is the reason for the Bill.
As someone who served on the Standing Committee which dealt with the Bill, I am bound to say that although we took issue with the then Conservative Government and Ministers of the day on many matters, to the best of my recollection this matter was not a subject which any hon. Members questioned. Therefore, I do not seek to lay undue blame or charge against Members of the previous Conservative Administration because, as I led for the Opposition at the time, it never occurred to me that anything was amiss about the way in which the matter was dealt with.
Both the present Opposition and the present Government thought that the Water Act conferred the necessary


powers to charge all properties for a transitional period. When sewerage and sewage disposal were the responsibility of local authorities they were financed through the general rates. Therefore, everyone helped to pay for the services, and did pay for them for many years, regardless of whether or not their properties had main drainage. It was clear that the Water Act was intended to change that situation in the longer term, so that only those who received the service would be charged. However, it was also recognised, no doubt by the Ministers then in charge, that it would take some time to identify which properties were connected and which were not, because, as I understand the position, no records were specifically kept for that purpose. Therefore, a transitional period was necessary in order to deal with just the question of identification and it was necessary to continue charging people on the old basis, that is to say, everyone.
However, the House of Lords has made it clear that the Water Act did not allow such arrangements to be continued, even on a transitional basis. I emphasise that the Bill in no way seeks to overturn or reverse the decision of the House of Lords. There are arguments about the decision and we have had to consider how to deal with the decision. We have received advice from some local authority associations—some of which we have not taken—which would like us to go much further in dealing with the immediate situation than we are prepared to go. On balance, we believe that it would be wrong to seek in any way to overthrow or challenge the House of Lords decision, but we must face it and ask the House to deal with the situation that now arises.
I know that some people believe that, for example, because of the general work of sewerage and sewage disposal which water authorities do, every citizen benefits and, therefore, whether or not a person's property is connected to the mains, he should make a direct contribution because it is impossible to go into our cities, go to the theatre and so on and escape the necessity for a first-class public sewage system.
For their part the Government have accepted and do accept that no property without mains drainage should pay a

sewage disposal charge, and that such charges paid over the past two years should be refunded.
I turn to the main provisions of the Bill. In Clause 1 we have two tasks. The first is to impose a duty to make refunds. It is extraordinary that, having got ourselves into this tangle, there is no duty for water authorities to make refunds. That must be put right. Secondly, we have to provide powers to recover the cost from other users. This is an important fact which has not yet been clearly understood, though it will be understood as water bills come in that if it is right or if the law demands that we exempt a large number of people from the duty of paying certain charges, inescapably those costs then have to be passed on to others. Inevitably the effect of the House of Lords ruling—the challenge to the situation—must be to increase the costs of the service to the other users who are already connected to the main sewerage system.
The main provision of the Bill—Clause 1—imposes on water authorities a duty to refund unlawful charges paid in 1974–75 and 1975–76. As I have said, legislation is necessary, because I am advised that there is no general obligation to refund money paid under an error of law. The Bill also provides for the cost of refunds to be recovered by higher charges to the remaining connected consumers, again for the reasons that I have given.
I am bound to tell the House that very large sums of money are involved. Many of the people who have been commenting on these matters in the recent past have given the impression that this is rather small change that we have been talking about, and that this matter concerns only a few small people. Without in any way decrying their right to go to law, I am bound to say that the main beneficiaries of this ruling are some very large industrial concerns. Those very large industrial concerns now have to be exempted from an obligation to pay, because they deal with their own sewage disposal problems, for example, and this has very considerable repercussions for most other water users.
The water authorities tell me that their estimate of the cost of this judgment of the House of Lords is about £60 million.


I think that that will show the House the extent of the matter. This ruling will mean—it is inescapable—an average increase throughout the country of 21 per cent. on the cost of bills sent to the rest of consumers during the next financial year.
There have been suggestions that as the need to make refunds arises from a mistake in the previous Government's legislation, the Exchequer should foot the bill. I am bound to say that we have not been able to agree to that suggestion, for two reasons. First, there can be no question of adding such a large sum to Government spending during the present economic difficulty, especially in view of the advice that we are receiving from all quarters of the House and around the country to reduce the amount of Government indebtedness.
Secondly, the implication of the judgment in the Daymond case is that only the connected consumers should have been charged in 1974–75 and 1975–76. That is the clear implication of the judgment which we have to accept. If that had happened then, their charges would have been higher previously than they actually were. For the Exchequer to meet the costs now would amount to a larger subsidy to the consumers. This would be contrary both to the intention of the Water Act, that water authorities should break even without subsidy, and to the present Government's general policy of phasing out subsidies to nationalised industries.

Mr. Eldon Griffiths: Will the Minister indicate how the estimate of £60 million is arrived at? I do not challenge it now. However, I think that we are all conscious that these forward projections made by statutory bodies can be wildly off the mark. To be told that it will amount to a 21 per cent. increase in bills begs the question. Is this £60 million a figure for the lost revenue of the authorities because they are no longer getting the money from those whose properties previously were unconnected, or is it their estimate of providing the service to those people in a different way?

Mr. Howell: I shall have that matter checked. If I am wrong, I shall have it corrected in the winding-up speech. How-

ever, I think that I am almost certainly right in saying that £60 million is the sum that has been illegally collected and has to be refunded, and, therefore, the additional cost that has to be collected next year to make good the refunds. That is the basic point.
I can understand the hon. Gentleman asking about these estimates of these large figures, and whether we can be reasonably sure about them. The water industry is unique, in the sense that we have eight separate industries and not just one.

Mr. Keith Speed: Ten.

Mr. Howell: I always forget Wales. I do that because, with my hon. Friend the Under-Secretary of State for Wales, the Member for Rhondda (Mr. Jones), sitting beside me, I dare not talk about Welsh problems, because I get a little upstaged.
However, I shall be surprised if these estimates are not very accurate indeed, because in recent years for the first time, as a result of steps that we took two years ago, we know the number of unconnected properties, and, particularly, we know the large-scale unconnected properties. One of the largest factories that we have in Birmingham now obtains relief in this way. Therefore, it is possible now to make these rather accurate forecasts and I believe that that is what has happened.

Mr. A. P. Costain: Is the right hon. Gentleman aware that I tackled my local authority about this matter two years ago and that it said that it could not make this differentiation because it had no knowledge of properties that were unconnected? The authority would not even accept from me that there was not a sewer in a particular road. How could it arrive at this sort of estimate?

Mr. Howell: The hon. Gentleman could not have heard me properly. I have said that since we came into office, for the purpose of giving a certain degree of relief we have been able to identify, over the past two years, the properties that are not connected. About a year ago there was considerable public agitation about this matter, and questions were put to me. We thought it right, as I announced in the House, that there should be some degree of relief for people


whose properties were not connected to sewers, and we placed it at 50 per cent. In order to carry out that purpose, the local authorities and water authorities have since had to identify these properties. I do not complain about the fact that it could not be done previously, but that was historically a fact. We are now in a happier position and I am able to give a more satisfactory answer.

Mr. Julian Ridsdale: I am interested in the size of the large concerns about which the right hon. Gentleman has been talking. Will he list, say, three of the biggest, and say how big they are?

Mr. Howell: I think I am right in saying that one, in Birmingham, is Imperial Metal Industries. I am almost certain about that. I visited the plant a few months ago and I was very impressed by the tremendous amount of work that has been done there in putting in a sewage treatment plant, and so on. However, as the firm is such a large ratepayer in Birmingham, the repercussive financial effects are considerable.
I think that another such concern is the Royal Naval Dockyard in Plymouth, where a similar situation applies and the sewage does not go into the normal system. Being such a large industrial concern, the effect of that in the South-West is considerable.
Those are two concerns that come to mind off the top of my head. However, if the hon. Gentleman wants examples of others, I shall be happy to ask my hon. Friend the Under-Secretary of State for Wales to supply him with other examples.
The Government have decided not to swell the total cost of refunds by clawing back to the Exchequer domestic rate relief paid in 1974–75 on account of higher general service charges to unconnected properties. That is one of the subjects that we had to consider. It would have been reasonable, given prudent financial principles, to have said that as relief was being paid where it now clearly ought not to have been paid, that ought to be claimed back by the Government. I do not overstate the position, but I give that to the House as a matter of fact and say that we decided not to follow that course.
The Government introduced, for the year 1974–75 only, a special programme of relief to domestic properties to help to alleviate the combined impact of water reorganisation and local government reorganisation. Domestic properties whose combined bills for general rates, water and general services rose by more than 20 per cent. over the previous year got Exchequer relief of 60 per cent. of the excess over 20 per cent. Some of that relief was paid on account of higher general service charges. Although refunds must obviously be reduced by the amount of such relief—otherwise people will be refunded something that they did not pay—the water authorities will be allowed to use the aggregate amount so deducted to reduce the costs of refunds to connected consumers. The sums involved, in this small operation, are estimated to be about £6 million. Connected consumers as a whole will therefore get roughly the same benefit from special relief that they would have got if charges, and therefore entitlement to relief, had been higher than they were in 1974–75.
I should stress that there is some element of rough justice. The deal, if unrealistic, solution would be for all rate bills for 1974–75 to be recalculated. However, that would involve an intolerable administrative burden, which I do not think the House would wish to impose on local authorities or water authorities. Therefore, the Bill provides for the rough justice solution which I have outlined.
Although the Lords' judgment was about sewerage charges, the Bill provides for the refund of any water charges paid in 1974–75 or 1975–76 on properties without a water supply. Exactly the same principle applies—namely, a person does not have to pay for a service that he does not receive. I should stress that this is likely to be significant only in one small part of the country. Before reorganisation, water was paid for in one area of the Anglian Water Authority's area not by direct charges to consumers but by a precept on the rates. Just as with sewerage charges, that arrangement was continued for a transitional period after reorganisation. The very small number of people in that one area who paid for water through their rates, even though they did not have a supply, will get their money back. In the rest of the country water rates


have normally been paid only on properties that have a water supply, or the use of one, so refunds will only rarely arise.
I now turn to the method of refund. In most cases, refunds will take the form of a credit against the 1976–77 general rates demand. This is the only practical and economical way of arranging for people to get back their money. This will involve a considerable amount of work for local authorities which act as agents for water authorities in collecting charges. We have worked out a detailed scheme with the local authority associations which we hope will reduce to as small a level as possible the burden on local authorities, thus keeping down the costs of administration. No part of the cost of refunds in the form of administration costs will fall on local authorities. They will be entitled to bill water authorities in full for any costs which they incur. I am sure that the House will agree that that will be a perfectly proper arrangement.
In their judgment on the Daymond case the Law Lords were critical of Section 30 of the Water Act, which contains the charging provisions. It was criticised because of its failure to make clear which water authorities are entitled to charge for the services they provide. The Law Lords concluded that the section must mean that charges could be levied only on those for whom the services were provided. However, this raised doubts about the authorities' power to charge anyone for those services which are not performed completely for identifiable users. Although such services as pollution control, recreation and amenity represent only a small part of the authorities' expenditure—about 2 per cent.—it is essential that they be funded properly. As these services are undertaken for the benefit of the community as a whole, it seems right to us—I hope that it will appear right to the House—that the community as a whole should meet their costs. Therefore, Clause 2 makes it clear that while in general charges may be imposed on those for whom services are provided, the costs of these specific services, which are defined in the Bill, may be visited on all ratepayers.
The relevant provision is declaratory in form. It clarifies who may be charged for the services since the water authorities came into being. Refunds will be slightly

reduced by expenditure on these items. If people are to have refunds in the next financial year it is essential that the Bill become law by 31st March. I look hopefully at Opposition Members in the belief that they will appreciate the position. It would clearly be preferable if we could get this measure on the statute book well before 31st March as the water authorities and local authorities have to send out their rate demands. I know that all of us have great sympathy with them in the considerable administrative task that lies before them.
This is a narrow Bill. It is concerned only with the Daymond case. I know there are many other aspects of the water industry on which hon. Members hold strong views. No doubt there will be an opportunity to discuss the wider picture after the Government's consultation paper is published. As I have said, it will be published pretty soon. We shall invite comments from all sections of the industry and from the local authorities. I am sure that we shall find means in the House for hon. Members to express their views before the Government determine in the late summer how they should proceed.

Mr. Eldon Griffiths: Will the consultation paper, which some of us are eagerly awaiting, be a White Paper? Will the Minister give us some indication whether it is weeks or months away?

Mr. Howell: I do not think that it will be a White Paper. I can understand the hon. Gentleman awaiting its publication with great eagerness. We shall be giving him the opportunity to correct the mistakes of his own legislation. I think I am right in saying that we expect the document to be published in a matter of weeks. I shall be disappointed if we do not publish it within two or three weeks. I know that we aim to get replies from all interested parties, and the public, not later than the end of July, so that we can proceed in the autumn. When the House is having a pleasant time on the beaches in the autumn, we shall be getting our legislation ready for early next year.

Mr. Graham Page: I presume that the consultation paper will not go only to local authorities and that it will not be kept a high priority secret document. I presume that hon. Members will see it.

Mr. Howell: I hope that they will. It is intended to go to all local authorities, water authorities, consumer interests, and recreational and amenity interests. I shall personally ensure that the right hon. Member for Crosby (Mr. Page) is sent a copy.

Mr. Graham Page: And signed?

Mr. Howell: Yes, a signed copy. I know that he takes a keen interest in these matters, as does his hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths). We want the views of hon. Members.
I hope it will be generally thought that in a difficult situation the Government have faced the problem in a sensible and realistic manner. We seek to put the matter right for the future without in any way challenging their Lordships' judgment, putting on a proper legalistic basis the financing of our water and sewerage services.
If I am right in my judgment that the House will accept this measure as right and inevitable, I invite the House to give it a Second Reading. I invite the co-operation of both sides of the House in what I hope will be a short but constructive period in Committee so that we can put this measure on the statute book at the earliest moment.

5.38 p.m.

Mr. Keith Speed: I begin by thanking the Minister for the way in which he has advanced the Bill. As he says, I think there is no difference between the parties. Mistakes were made which were not taken up by the Opposition or the Government then responsible. Perhaps I should start by declaring an interest. I reside in a property which is not connected to anything at all, and I shall be a beneficiary under the Bill.
It has become clear to us all that a simple substance such as water becomes complex when the lawyers start to play about in it. There is no doubt that the decision of the Law Lords made this legislation necessary. There is no doubt that it is urgent, and it is important that we try to complete all its stages as soon as possible for the reason that the Minister has given.
Faced with the Daymond judgment, it would have been possible for the Government to have legislated and restored completely the intention of the 1973 Act

by making premises liable to the general service charge whether connected or unconnected to a public sewer. They would have been right to do so in equity, but I do not think it would have been right to have had that element of retrospection. It would have been wrong to have challenged the Law Lords. I am sure that the Government were right to take this decision.
The Minister referred to a number of local authority associations and those who asked for the Treasury to pick up the £60 million. The Government were right to resist that suggestion. I do not wish to see that extra amount of public expenditure. It would have been popular, but I believe that it would have been wrong to take that action. Therefore, I support the Minister.
I agree that the Bill will involve an average increase of 21 per cent. in regard to general services for the rest of the community. I suspect that some people will receive a nasty shock on that score, and I do not think that that factor is sufficiently widely appreciated.
We accept the principle of the Bill, but since there is little time between this and remaining stages—which I understand are to be taken on Wednesday of next week—I shall seek to suggest ways in which the Bill needs amendment and clarification. Obviously we do not wish to see litigation arising on these matters after the Bill is enacted.
I hope that the Minister will give constructive answers to our queries and the points we make. He will appreciate that there is little time for amendments to be tabled to meet points made by the various interests who may be in touch with us over the weekend and in the next few days. It may be that amendments will have to be tabled in another place, but I assure the Minister that we shall approach this matter in a spirit of co-operation. I am sure that he will respond in the same way.
I understand that 900,000 properties are affected by these provisions. But will the Minister in his reply give the House practical examples of the effect of the Daymond judgment on domestic properties after the Bill is enacted? A great deal depends on local authority collection charges and other factors, matters at which one can only guess in general terms. I feel that at the end of the day


many people may be worse off than they would have been but for the Daymond judgment. A backlash may be felt by hon. Members later on in the summer when these provisions become operative. It might stave off difficulties if advance warning can be given that people may not be in the promised land in terms of charges. We must remember that the charges on connected properties will be heavy, the rates are still rising, and incomes are tightly limited.
Will the Minister consider a suggestion made by the Association of District Councils about phasing the figure of £60 million over a longer period than a year? I can see the problems, and no doubt this suggestion was considered and rejected, but perhaps we may have an explanation.
I should like to make a number of detailed points. I shall try to pick a clear path through the technical detail, and my hon. Friend the Member for Daventry (Mr. Jones) will be dealing with other points later in the debate. Some of the points can be said to be Committee matters, but we shall seek to deal with them now since the Bill is required urgently.
Clause 1(1), which deals with the question of refunds, appears to be inaccurate since the action taken will be by way of credit set off against general rate. There are some problems involved which I should like to illustrate by reference to my own property. I moved into my present house at the beginning of November. It is not connected to services and no doubt the previous owner who has moved out of the district will have some problem in obtaining a refund of money due in the earlier period. I presume that publicity will be given to the Bill to ensure that there is a simple way for people to obtain refunds when there has been a change of ownership. It is no good giving the previous owner a credit against rates because in my case my predecessor in the house has moved to a different local authority area. This poses a practical difficulty.
In regard to Clause 1(1), should not the Bill authorise allowances against rates? I see the difficulty because, unless the situation is made clear, water authorities could be deluged with demands for cash payments, notwithstanding the fact

that district councils will make the calculations and give allowances and credits in rate demands.
Subsection (1)(a) says
all charges for sewerage or sewage disposal (other than charges for the removal and disposal of the contents of cesspools)…".
I believe that that provision is too wide and could cover charges levied by and paid to district councils. It could also cover charges levied by water authorities for reception and treatment at sewerage works of contents of cesspools emptied by tankers. Surely what is intended is a refund of that part of the general services charge relating to the exercise of an authority's functions under Section 14 of the 1973 Water Act. I should have thought that a tighter definition was needed.
I turn to Clause 1(1)(b), which contains the phrase
to which they did not supply water".
I feel that phrase might be suspect. I wish to draw attention to a recent High Court decision in the case of Miguel v. West Pennine Water Board which might have some bearing on the question of the definition of "supply of water". In addition, it could possibly be argued that if people were absent from their homes or commercial premises were not operative or were closed on 1st April of the two relevant years, they could require a refund. That is not my reading of the wording, but I know that some legal experts are concerned on that score.
I should like to deal with Clause 1(2). It may be implicit in the provision that the 50 per cent. relief from general service charge in the current financial year for domestic premises not drained directly or indirectly into a foul sewer or combined foul-surface water sewer is taken fully into account. Although that may be implicit in the wording, I wonder whether it would be advisable to make it explicit. That point may be worthy of greater consideration.
On Clause 1(5) it has been represented to me by water authorities that the subsection is too narrow. They wish to recover the cost of funds in the financial year 1976–77, but since there are long and complex tasks of verification extending beyond that time there is the problem of administrative costs in the current financial year, and those costs might fall on


water authorities. It might be helpful if the Bill were to state that it would relate to any period after 1st April 1976 rather than tie down the matter specifically.
I am a little worried about Clause 1(7) because complex issues can arise in the case of surface water drainage. For example, roof and surface water can drain from premises via a fall pipe across a pavement, not through any defined gully or channel, into a kerbside gutter and then to a public sewer. The occupiers of such premises clearly enjoy the benefits of the water authority's sewerage service and, in equity, should pay for it. I am not clear whether that is the situation, and perhaps the Minister would tell us.
On a more general point in seeking to prevent other Daymond-type situations in the future—as we all want to do—is it not possible for the definition in respect of refunds to apply for the purpose of future charges as well? The Association of District Councils and the water authorities have strong views on this point.
On the same point, is it the case that the words in line 29
foul water or surface water or both
mean that premises, whether domestic, commercial or industrial, not connected to the foul water sewer but connected for surface water only will be chargeable in the entire general services charge?
On the general question of refund, it has been put to me that statutory undertakers, particularly the nationalised industries and electricity power generating stations, are not connected and will obtain the lion's share of the refunds. A figure of up to 70 per cent. has been suggested to me. I do not know if this is the true figure.
The situation may be that a considerable body of domestic users—those who are connected and will be paying the extra 21 per cent. this coming year—will be paying a lot of the money which will be going both to nationalised and to other major industries. If so, it will have profound consequences. The Minister hinted at this. There may be equity at the end of the day, but I do not think that this point has fully come out, or that it was fully appreciated by those who entered into the law case in the first instance.
Clause 2 does not make provision for the validity of the 50 per cent. relief granted by the collection of charges order in 1975. I am told that the water authorities and the district councils could be challenged in the courts unless the Bill validates this relief. I do not know if this is so. I am not legally qualified, thank goodness. If there is such a challenge, we should want to stop that as soon as possible. It may be that something needs to be done to tighten up that aspect.
I apologise for making these detailed points, but I think they are important. If tonight the Minister can give us assurances on them, that is fine. If not, I hope that we can, in a constructive spirit, see whether there may be some amendments or tightening up on definitions if some of my points have validity.
In a few weeks' time the new water industry will be two years old. The problems in the Bill are not of the industry's making. There are also problems, as the Minister knows, of equitable charging of past neglect and under-investment. I am sure that these and the other things will be highlighted in a few weeks' time in the Minister's White Paper, Green Paper, or whatever colour it may be.
Real progress has been made in the last 23 months by the national water industry in its efforts to serve the whole community. We take water and sewage disposal very much for granted. These subjects are not very often discussed in this House.
The sufficient supply of water and the growing cleanliness of the rivers and coasts are in the hands of 10 regional authorities with both local authority and appointed members. The National Water Council, under the vigorous leadership of Lord Nugent, has done a great deal for the industry. The many dedicated men and women working throughout the country have also done a great deal to ensure that services are kept going and are able to meet the growing demands on them.
It is very often forgotten that water is the principal raw material of industry. It would not come amiss, therefore, if the House were to congratulate the water industry on its second birthday for everything it has done in welding the industry together.
Much progress has been made in the past two years. Although there are problems arising from the Water Reorganisation Act, the Act was necessary, and I am confident that the sort of progress already made will be maintained and expanded in the future.
I believe that the Minister shares my opinion that we can teach our Common Market partners a great deal about water and measures against water pollution. The Minister has recently been putting that point of view across in Brussels, and seeking to change some of the attitudes in Europe.
I am sure that we wish to thank all the men and women who often bear the heat and burden of water charges and other problems for which in many cases they are not responsible.
I support the Bill. I hope that the Minister will accept what we are saying in a constructive way. I wish the Bill god-speed, because we want to get it under way as quickly as possible, with the least possible administrative delay. We look forward to hearing from the Minister on these detailed points when he winds up later.

Mr. Deputy Speaker (Mr. Oscar Murton): For the protection of the business of the House, the proceedings on this Bill must be disposed of by 7.30 p.m. Time is short and a considerable number of hon. Members desire to take part in the debate. I appeal to the House in its own interest to limit speeches to 10 minutes.

5.54 p.m.

Mr. John Tomlinson: I shall endeavour to confine my remarks well within the time suggested, Mr. Deputy Speaker.
I am unable to go along too far with the later remarks of the hon. Member for Ashford (Mr. Speed), in the course of which we heard his apology for the Water Reorganisation Act 1973, but before he got to that part of his speech I agreed with much of what he said.
I support the Bill and the general approach of the Government towards this measure. At the same time, I regret its necessity, which has arisen from what for other reasons besides this was an ill-conceived and badly executed Water Reorganisation Act in 1973.
That argument has been well rehearsed, and it is no part of the process of this debate to go through it again tonight, but the point has to be made that without that measure we should not be faced with the invidious circumstances with which we are faced today.
I support the Government entirely in agreeing that the cost of the measure should be borne directly by the consumers and should not be Exchequer-borne.
I differed slightly from the view of my right hon. Friend, when he was appealing that we should not go too far into other issues because there may be a consultative document produced in the next three or four weeks. By that time it may well be too late to influence some of the regional water authorities in their present attitude.
For example, the Severn-Trent Regional Water Authority—which, I believe, is seriously damaging the counter-inflation policy of the Government by the charge it is seeking to impose upon ratepayers next week—will not be influenced unless we influence it now. If we wait for the consultative document, and constrain our criticism for a further three or four weeks, it might by then well be too late.
As my right hon. Friend will know, local authorities like the West Midlands Metropolitan County Council have confined their increase in rate demands next year to 5½ per cent. My own North Warwickshire Borough Council has done even better in confining its increase in rate demand to 3 per cent., yet when it has played its full part in cutting out valuable and important areas of public and social expenditure, and played its part in supporting the Government in its necessary counter-inflationary policy, we find the Severn-Trent Regional Water Authority seeking to levy through the local authorities—so that possibly the local authorites will get the odium for it—increases in water rates next year of the order of 50–55 per cent. Such proposals are totally unacceptable and are fundamentally damaging to the efforts of this Government and the local authorities in regard to the counter-inflationary policy.
It is not sufficient to allow them to get away with the excuse that an unfortunate court judgment is the sole responsibility for this enormous increase in rate demand which they will be making next year. It


is becoming too easy for them to refer to a court judgment and try to brush off the whole responsibility for 50–55 per cent. increases for that reason. That is totally unacceptable, and it needs to be said not only from the Back Benches but from the Front Benches. I hope it will be said from the Front Bench when we have the reply to the Debate.
I should have thought that at the moment it was reasonable to expect that regional water authorities, with prudent financial management, would have been led to anticipate even the vague possibility that they might lose their case in the courts, and that they should have shown some restraint on current expenditure during the current financial year 1975–76. This they singly failed to do. They are seeking in the next financial year to push the whole cost directly on to the consumer, and to continue the whole of their capital programme—without abating it in the way that local authorities are doing in seeking to constrain their rates—while at the same time blaming it on the court judgment and the unfortunate wording of the Act.
I hope that we shall make it quite clear that, while we support the measure, at the same time we express our great displeasure at the action of certain regional water authorities. I particularly mention the Severn-Trent Regional Water Authority in my own area. Other hon. Members will have examples to give from their own constituencies.
While we say that this is to be done during the next financial year, we should also make quite clear our displeasure at the fact that there is a desire and willingness on the part of the Severn-Trent Regional Water Authority and other regional water authorities to continue with their capital programmes, and to show no restraint in their public expenditure—such as local authorities are having to show—while at the same time blaming the whole of the increase in the regional water authorities' charges on this particular measure.
I hope that my right hon. Friend will take note of the fact that the absence of hon. Members from this debate does not necessarily mean approbation for the conduct of regional water authorities or of their proposals for the forthcoming financial year.

6.0 p.m.

Mr. John Cordle: The hon. Member for Meriden (Mr. Tomlinson) made a strong plea for a consultation document, which I, too, would have much preferred to have been available deal in some of the assessments and today, if possible. It would help a great arrangements being made by the local authorities at the moment, as well as giving some instruction and help to the constituents who have written to their Members of Parliament about this whole issue.
I find myself at variance with the Government in respect of this Bill but, in general, I shall support the Bill since it is a vital part of the effort to put right what has gone wrong because of the errors in the original drafting.
In my view, the whole philosophy and approach of this Bill is both wrong and unfair. It is wrong and unfair to large numbers of my constituents and, I am certain, to the constituents of other hon. Members. It is wrong because most persons connected to a sewerage system are to be made to suffer because of errors of the Government and of the water authorities in 1974–75 and 1975–76. Those errors were to impose charges on persons who were not legally obliged to pay the sums demanded of them. The House of Lords pointed out the error, and the Government rightly decided that the services should be charged on those who enjoy the benefits.
This Bill proposes to recoup the losses incurred by refunding illegal charges collected over two years from the remaining ratepayers over one single year. This seems to be quite wrong in principle. The refunds should be paid and the water boards should be reimbursed out of a central fund. Surely that is the more just and equitable way to deal with the problem.
Therefore, Clause 1(5) should be deleted and replaced with some provision to ensure that the burden of the necessary refund should fall on the community as a whole.
The Bill is unfair because the great increases in water charges for 1976–77, if the Bill is enacted unamended, is particularly unfair to those on fixed incomes who already are hard pressed by inflation and now are to be instructed to compensate the water board for the refund within a single year.
The increase presently proposed for my area—the Wessex Board—is 25·3 per cent. for unmeasured supply, the highest figure in the entire country. This is far too large to be either fair or acceptable, and it must be reduced.
If the Government will not listen to reason and pay the refunds from public funds, at the very least the ratepayers should be able to spread the burden over, say, five years and not be expected to find the whole amount immediately.
May I draw attention to the drafting of the present Bill? Clause 1 makes it the duty of all water boards to pay refunds on 1st April 1976. Clearly, this is quite impossible as a mere matter of administration. Whatever else the Bill does, it must cause the authorities to have to increase their staffs, even temporarily, to deal with it.
The wording of Clause 1(1) should be altered as recommended by the Association of District Council Treasurers at its meeting on 6th February of this year to allow the authorities a reasonable time to make repayment. Therefore, the wording should be altered from "On" to
From and on or after 1st April 1976.
It is clear that the implications of the Bill in Wessex and Bournemouth have meant not only a great deal more work but a considerable increase in money costs to both local authorities and water boards. They have meant that the local authorities have had the task of identifying unsewered property, and it is estimated that the regional cost of refunds in respect of 1974–75 and 1976–77 could exceed £4·1 million. I understand that this sum has been added to the normal income requirement for 1976–77 as it is the authority's decision to recover the cost of refunds from connected consumers in a single year.
Sadly, the overall effect of the Daymond judgment is to increase charges in 1976–77 over 1975–76 by an average of 28 per cent. In the case of Bournemouth, £380.000 is the apportioned cost of refunds to be borne by the connected consumers. This represents an enormous increase in terms of the rate in the pound of 17·9 per cent. when compared with 1975–76 and, in addition, the effects of increased expenditure and the reduced charging base require a further increase of 13·5 per cent. That represents an

overall increase probably of 31·4 per cent.—another regrettable Daymond consequence.
Will the Minister give some indication when he winds up whether he will agree today to a longer period of repayment for those constituents and local authorities who, through no fault of their own, now face not only increased water charges but the refunds demanded in the Bill by 1st April?

6.7 p.m.

Mr. Julian Ridsdale: The reason why I make a brief intervention is that I fear that this may be another case of not being fair to the small man. During the passage of the 1973 Bill, it was my criticism that we were not being fair to the small man. In this Bill, as it is drafted at present, once again I fear that the Government are making the same mistake.
A great number of occupiers—rate-payers—will be angry if this Bill is not amended. The words in page 2, line 29, "or surface water" and, in lines 31 and 32,
the use, in respect of the hereditament, of facilities which drain to a sewer or drain so communicating",
can be interpreted so as to debar a great number of hereditaments from eligibility for refunds.
The benefit accorded to a hereditament from "run-off" by gravity which results in the surface water flowing to a street gutter should be regarded as one of the services paid for on the general rate levy of the district council, as should the disposal of surface water which drains directly to a surface water sewer.
That is the one point which I wish to put to the Minister, and I am sure that he will follow it in detail. It is more of a Committee point, perhaps, but it is one which, if it is not covered, will lead to an increasing burden being placed on the small house owner and the small bungalow owner—the very persons whom we wish to help—and not the big user, as the Minister pointed out.
I hope, as a Government spokesman said, that the water authorities, unrepresentative as they are, will not use this Bill as an excuse for extravagance and for not cutting back on some of the capital expenditure which in my view is unnecessary in these difficult times.

6.9 p.m.

Mr. Eldon Griffiths: At the outset, I have to declare two interests. The first is that I was one of the authors of this Bill and, in the circumstances I promise to be brief because, on this matter, I have a good deal to be brief about.
I agree with everything that my hon. Friend the Member for Ashford (Mr. Speed) has said. Far from believing that the 1973 Water Act is a bad Act, I believe it is an extremely good one and that we have now in this country the best structured and probably most efficient water and sewerage industry in the world. This is not to say that all the water authorities are the best in the best of all possible worlds—of course not—but I hope that the Minister will go very carefully in bringing in a White Paper and proposing new legislation. I hope he will not seek to dig up by the roots an important radical reform of this vital industry.
Secondly, I want to declare an interest in that I am not connected to the sewers in my own cottage. I am perfectly happy that way. Indeed, I would advise a lot of regional water authorities not to regard it as a measure of their hydrological virility that they have to connect every single cottage, however remote, to the main sewers. That would be far too expensive. Provided one has a proper cesspit, regularly cleaned, that is perfectly adequate.
Having declared my interest, may I deal briefly with the Bill. I have looked up the Committee stages of the 1973 Act, and I am bound to say that this particular matter was not debated by the Government side of the day nor by the Opposition. We were far too concerned at the time about the general question of metering. Possibly, we should have paid rather more attention to the precise language of Section 30(1) of the Act. Nevertheless, for my part, having had some of the responsibility, I ought now to say that had I realised at the time that the result would be that large numbers of people not connected to the sewers would be charged for sewerage, I would not have accepted it. To that extent I believe their Lordships have quite rightly inter-pretend the intention of at least one Minister on that Committee.
I would have regarded it as contrary to natural justice, in exactly the same way as I would have thought that the GPO's charging for a telephone that was not installed would be wrong, or if the BBC were to charge for a television licence when a person did not have a television set, and so on. I would not have agreed to it had I known at the time that this would be the consequence. Therefore, I welcome the Bill. I feel that the Government are quite right to bring it in, and for my part I shall hope to give it a fair wind.
I raise three brief questions with the Minister. The first is in respect of those who are not connected and who now will be relieved, at least for the time being, of the charges. What is to happen henceforth? Plainly, they are going to have to continue to have their cesspools cleared. Is it the intention from now on that a direct charge will be made to them for that particular service? How is it to be calculated? Can the Minister who is to reply give some indication of how large these charges will be? Many of those who are not on the sewers are extremely poor people living in remote rural areas and if the emptying charge is a steep one they will be in difficulty. Therefore, it is important that the House should know approximately the level of direct emptying charges that may now be imposed.
My second question concerns the balance of consumers who are to have this very high new cost laid upon them. Many will find that their water and sewerage rates go up very steeply. A 21 per cent. average means some very nasty shocks indeed for many of our constituents. It is only fair to acknowledge that. I ask whether people who receive these extremely heavy increases will be eligible for rate relief? That is an important point particularly for people who are on small fixed incomes, as mentioned by my hon. Friend the Member for Harwich (Mr. Ridsdale).

Mr. Denis Howell: If I may deal with that point immediately, of course there cannot be any rate relief because the Government of the party opposite created a national industry and there is no rate relief for a nationalised industry, a water industry. Under the proposals of


hon. Gentlemen opposite, these organisations are nationalised and, therefore, there cannot possibly be eligibility for rate relief.

Mr. Griffiths: I disagree with the right hon. Gentleman that this is a nationalised industry. We were very careful indeed not to do that.

Mr. Denis Howell: What is it then?

Mr. Griffiths: The right hon. Gentleman is apparently answering my question. There will not be rate relief, but I feel that I was right to raise that point.
In conclusion, this Bill clarifies the position in respect of the charging for services rendered by the regional water authorities in respect of pollution control, recreation and amenity, and a number of other matters. That certainly was the intention of the original Act. But I feel it is right to say that when the 1973 Act was placed on the statute book we were in a better financial situation in this country than we are today. There was a good prospect that we could go forward with the new structure for the cleaning of rivers and opening up of water space for recreation and amenity. I am very sorry that, for a variety of reasons which I should not go into here, the financial background today is such that we are not making the progress on cleaning the rivers and opening up water space that was intended at the time that the Bill was passed.
I hope that when the hon. Gentleman comes to issue his White Paper he will restore to the industry and to the British people a little of that momentum towards pollution control and the improvement in recreation and amenity in water space which was the intention of the 1973 Act and of both sides of the House when we passed it. I entirely agree with my hon. Friend the Member for Ashford that there is no more vital raw material in this country than water, but we have to look at both dirty and clean water, for it is the recycling of the one to make the other that is the future for water supply in our country.
I for one welcome the Bill. I regret that it is necessary. I hope that it will have a speedy passage, and I endorse entirely all that my hon. Friend has said from the Front Bench. We owe to those who work in the water industry, whether in sewerage,

water supply, land drainage or recreation, a vote of thanks for the very good work that they do.

6.18 p.m.

Mr. Gwynfor Evans: The House will appreciate that in Wales at any rate water is a burning subject. There the Water Reorganisation Act of 1973 has had, in conjunction with the local government reorganisation, a dire effect. In creating a water authority for a big part of Wales joined with a small part of England, the Act disregarded the integrity of Wales. But, in addition, perhaps more seriously, the Act endowed so-called Welsh national water authorities with great and valuable assets of local authorities and water boards without giving them or the ratepayers a single penny in compensation, although these authorities throughout the years had themselves built up and financed the water undertakings.
Following this kind of legalised robbery by the State, the ratepayers, especially in Wales, were further subjected to an unprecedented escalation of water charges and, of course, charges by authorities for sewerage services, even when they were not connected with the public service, which is why we have this Bill before us today. In Wales, the burden imposed on domestic consumers is a scandal, and it is not mitigated by any material return for Welsh water which supplies industry and the domestic needs of consumers in huge and wealthy conurbations in England. Water has been referred to more than once today as the biggest raw material of industry, and we should be in a position to have some material return from it in Wales.
Welsh commercial users have been among the greatest sufferers in this matter. A formidable impediment has been created in the way of industrial development in Wales. Now that the Government have been forced by the Daymond case to remedy a wrong of their own making, whereby charges were imposed on households and premises which were not connected with the public sewerage services, they seem to have compounded the injury that the Act did to local authorities.
Whatever may be said about the debates at the time—I was not in the House then—the Government had been warned about the consequences of this


part of the Water Act. There is no doubt that the responsibility for the wrong is the Government's. In these circumstances, it must be argued that the cost of reimbursing those wrongfully charged should be borne by the Government. But it is the ratepayers and the ordinary commercial users who will have to pay another addition to their back-breaking burdens. The Minister skated too lightly over this aspect of the matter.
Again, instead of accepting the cost of administering this piece of retrospective legislation, the Government have loaded it on to already overworked local authorities. They are expected to take on no more staff to deal with it. Since Whitehall and Westminster made the errors, Whitehall and Westminster should shoulder the financial responsibility for correcting them. Instead of presenting the ratepayers with yet another addition to their rates, the Treasury should have been instructed to make the refunds itself, as well as paying for the heavy costs of administering the refunding.
In Dyfed, in my part of the world, the Government's refusal to accept responsibility has become almost a habit as we have seen in their refusal to accept responsibility for the costly and disastrous accident with the Cleddau Bridge. But, apart from imposing these extra burdens on the ratepayer, the administrative work itself has been thrown on to the district council staffs. That administrative work is considerable, especially in rural areas like the one that I represent. The work involves identifying the unconnected properties, which in itself means a great deal of work.

The Under-Secretary of State for Wales (Mr. Alec Jones): Just to get this one out of the way, I assure the hon. Gentleman that it is not the intention that costs will fall on rating authorities. In fact, the rating authorities will bill the water authorities for the administrative costs to which the hon. Gentleman refers.

Mr. Evans: Am I to understand that the Minister is now saying that the local authorities will be reimbursed for the costs of administration which are now being imposed on them?

Mr. Alec Jones: For the administrative costs, yes.

Mr. Evans: That is very good news, which I am sure will be greatly welcomed.
I was going to say how great these burdens are. Even the reimbursement of the direct costs of the administration does not do away with the heavy labour which has been imposed on local authorities in this respect. Arduous work is involved in making the survey which is necessary to identify unconnected property—indeed, in refunding for as tar back as 1st April 1974 and adjusting the refund to take account of the special domestic relief. In additoin, I understand that the rating computer programme has had to be amended. At any rate, the cost of the administration is pretty heavy and until now has fallen on the district councils.
I should also like the Minister's comment on the fact that these councils may find it administratively impossible to keep to the timetable in the Bill. There has been a great clamour in some political quarters about the so-called overstaffing of local authorities and the increased costs of local government, but much of this is hypocritical when one realises how much of a load is put on local authorities by this kind of thing, partly due to the reorganisation scheme, but also because of the Water Act itself.
But I should also like to touch on the preposterous and unacceptable aspect of sewerage and water rates, quite apart from the refunding and the new load of work thrown on local authorities by the Government. Whereas the sewerage and water charges were, before local government reorganisation, an insignificant part of the general rate, they now assume the proportions of major charges—indeed, the biggest charges of all in the case of district councils.
In my district of Dinewfr, the water rate and sewerage charges this year are more than twice the general rate levied by the district council. The water rate is 14·8p and the sewerage rate 14p, making a total of 28·8p payable to the Welsh Water Authority. The general rate demand for the district authority is only 13p. So the charges for those two public services are more than double the total charged for district council services put together.
Furthermore, those whose very low incomes qualified them in the pre-reorganisation days to a rebate now get


none. There is no rebate on these big water and sewerage charges, even for the very poorest. The poorest ratepayer has to pay the full amount, just as much as the richest. The least that the Government could do is amend the Bill in this respect to provide for assistance to the poorest section of the community. Also, the position of the Welsh Water Authority in relation to the rate support grant should be re-examined.
The householder who is not connected to main sewerage is not out of danger with this Bill. He may have avoided the Scylla of the charges only to collide heavily with the Charybdis of perhaps penal fees which could be levied by the district council for clearing his cesspit. I hope that this will not prove to be the case.

6.27 p.m.

Mr. David Penhaligon: I suspect that much of the agreement in the House tonight is due more to relief that this matter is settled than to admiration for the settlement which has been worked out. My party certainly agrees that it was illogical to charge people for something that they did not receive. That is the basic cause of the judgment referred to, as the Bill recognises. But we would add that people should pay—we know that to a certain extent they now do—for services which benefit everyone.
The view has been expressed that these services account for a larger percentage of the total bill sent out by water authorities than has been recognised hitherto. In other words, the most important thing that water authorities achieve, at least so far as sewerage is concerned, is the prevention of mass disease. One benefits from that service whether connected to the sewerage system or not.
One hon. Member claimed for his area the record increase because of this judgment—24 per cent. I do not know what the largest increase is, but in Cornwall, which is covered by the South-Western Water Authority, the increase will be 35 per cent. That is a substantial sum to collect in just one year. Despite the Government's present financial difficulties, I wonder whether they could not think again about recouping all this money in one year. If the Government could make a contribution, I am sure that that would be welcomed.
It is unfair that the rates in my area will rise by 35 per cent. when the national average increase will be 21 per cent. People in my area are connected to the system like everyone else, yet they are to be punished in this way for living in an area where many properties are not connected. I hope that the Government can look into the possibility of help towards the refund.

Mr. Eldon Griffiths: Is the hon. Gentleman saying that it is the Liberal Party's policy to increase taxation to pay for it?

Mr. Penhaligon: One of my hon. Friends suggested before I entered the House that perhaps we were in a Clay Cross situation and that those responsible for the original legislation should pay personally. If I say that the Government should make a contribution, that means that the money comes either from taxation or from borrowing from some of our friends. I do not deny the implication.
I must admit that I am not impressed by the water authority. The hon. Member for Bury St. Edmunds (Mr. Griffiths) said that we had one of the best set-ups in the world. I do not consider myself an expert on what the other parts of the world have, but if ours is the best I feel sorry for some of the others.
The water authority in my area is famous for its glossy magazine. My hon. Friend the Member for Cornwall, North (Mr. Pardoe) has collected nine or 10 of the magazines, which add up to an impressive document. I cannot help wondering how much it costs to produce them.
There is a tremendous argument in our area about the water authorities' decision to charge direct instead of through the local councils. One cannot help coming to the conclusion that it is bound to cost the people in the area of the South-Western Water Authority more money individually, even if it might give a small advantage to the water authority because it receives its money earlier.
The hon. Member for Carmarthen (Mr. Evans) pointed out the nonsense of the present situation, saying that some people pay more for water and sewerage than for local government. We all know the reason. It is not that local government does not cost more, but those serving in


local government are elected and report to somebody. They can be chided or thrown out. Two-thirds of their money is given to them by the Government. But every penny of the revenue of the water authority, which appears to report to nobody, is taken out of the local ratepayer's pocket. That is nonsense of the first order and a basic contradiction of the democratic principle.
There is one thing that disturbs me about the idea that water authorities must be self-financing. I can comment only on what has happened in my area in the past two years. There is no recognition of the lack of local resources. There is no resources grant for water, if I may put it in that way. We have reached an appalling situation in areas such as mine. Cornwall has a winter population of about 330,000. I understand although I am always a little dubious about the figures, that during the summer we have 3 million visitors. Sewage disposal in Cornwall at the peak of the summer is nearly at breakdown point. Merely refusing to talk about that, as most people in our area do because of the possible effect on the summer trade, will not make the problem go away. I draw the Government's attention to the fear which is at least expressed behind closed doors in my county. The lack of a resources grant means that the situation will never be rectified.
I hope that some comments can be made about another big anomaly which is about to be created. If we are to charge people for emptying their septic tanks, which must be the logic of the Bill, I presume that the charge will be liable to VAT. I do not understand why it is logical to charge VAT on emptying a septic tank just because the householder does not have a pipe for the sewage to go down when presumably there is no VAT on the water rates. In my area, where many people already have their septic tanks emptied and are charged VAT, the VAT charge is not very popular. Perhaps the Minister could speak to the Chancellor of the Exchequer about that.
My hon. Friend the Member for Isle of Ely (Mr. Freud) has had great concern expressed in his area about people's apparent inability to obtain compensation from the water authorities for loss of business caused by the carrying out of public works. I understand that a road in

his constituency has been blocked for about six months because of a new installation, with the tragic result that a business has gone bankrupt. It appears that the constituent concerned is not entitled to compensation.
Despite the criticisms advanced from the Liberal Bench, I do not believe that there will be much opposition from the Liberal Party to the Bill. It is important to get the matter cleared up as soon as possible, and then perhaps the new White Paper will give us the opportunity to look again at the difficulties encountered in the last two years, but there will not be much opposition until 31st March.

6.36 p.m.

Mr. John MacGregor: I am grateful for the opportunity to take part in the debate, because East Anglia is one of the areas most affected by the Bill. It has a much higher than the national average proportion of households not connected to mains sewerage.
I understand the difficulties in which the Government and the House are faced over the Bill, not least because if we reversed the House of Lords decision we should be introducing retrospective legislation, which in general I deplore. But I have considerable doubts about whether we are doing the greatest service to either group of ratepayers in the Bill we are discussing tonight. Let us consider first those who are not connected to main sewerage. I have a feeling that those who pushed through to the House of Lords and won the decision there will have gained a Pyrrhic victory. The decision may well boomerang on many who are not connected. I suspect that the average charge for emptying septic tanks will turn out to be bigger than the saving that many of those not connected will have achieved as a result of that decision. Of course, averages can be misleading and some will undoubtedly benefit. But many others will not.
In the area of my district council it will now cost £30 a year, plus VAT, for an average number of emptyings of septic tanks. I have heard the rumour—I do not know whether it is true—that in one water authority area the cost will be £90 a year. That will certainly be greater than the saving that many will have as a result of the decision. Many of those not connected will find that there is a


nasty backlash and that the decision has not been to their benefit.
I come to those who are connected, particularly the domestic householder and ratepayer, with whom I am most concerned. In the area of the Anglian Water Authority, for example, the costs of sheer administration in dealing with the refund are thought to be about £500,000 in the coming year. Although the local authority can reclaim the money, the water authority must meet the extra charges in the end, and so they will come back to the ratepayer, who will have to bear this burden.
Secondly, the refunds in the authority area will amount to £11 million. The combination of refunds and administrative charges means a 31 per cent. increase this year in the water authority precept to those who are connected. That has ruined the tremendous efforts of my county council in the past year to hold down the general local authority rate. The council feels that it will be unfairly accused of having caused a great deal of the increase, whereas it arose from the House of Lords decision.
The unfairnesses go even further. I am concerned about the unfairness to the individual ratepayer. Had it been known that the decision would be made, it is likely that the charges for emptying septic tanks in the previous two years would have been higher. Therefore, the ratepayer who is connected is now being asked to pay an even bigger charge than he would otherwise have been, because the costs to be recouped would have been less. Above all, it is the poorest ratepayers for whom I am most concerned. I was unable to check this before the debate, but I understand that there are no rate rebates for the water authority charges. An average increase in Norfolk in the coming year of 31 per cent., unrebated in any way, will be a heavy burden on the poorest ratepayers at a time of high inflation.
Many of those benefiting from the decision are not domestic ratepayers but the public institutions, nationalised industries, and private-sector industries. They will benefit at the expense of the poorest ratepayers who have no opportunity for a rebate.
I know that the Government, having made up their mind on a difficult decision, are determined to push this legislation through. Therefore, I conclude with three suggestions by which we can ameliorate some of the effects of the Bill which I have described, suggestions which can be pursued in Committee. The first two are concerned entirely with the administrative costs. There are considerable doubts about the inclusion of surface water in Clause 1(7)(a). If that were excluded, it would be easier for local authorities to trace those ratepayers who are not connected, because that would directly relate to the provision of 50 per cent. rebate for those unconnected which applied to last year. But through this Bill we are changing the definition of non-connection and thereby making the task of tracing greater and the cost of administration higher.
Secondly, the Rating and Valuation Association believes that the word "facilities" in Clause 1(7)(a) is unclear, and a clearer definition in the interpretation clause would help in administration.
Third, I hope that even at this stage something can be devised to help the poorest ratepayers, who are facing particularly heavy charges. Properties subject to special rating under Clause 1(7)(b), and also properties which I understand are, in the technical term, rated in cumulo, are to be aided substantially. They are often properties in the public sector. I question whether it is desirable that they should have such substantial concessions when others are having to bear the burden. Surely the Exchequer will gain from these measures, because, if some private sector industries get such rebates, that will increase their pretax profits and so, in a roundabout way, the Treasury will draw something back. If a scheme could be devised whereby that money could be given back so that the charge to the domestic ratepayers was not so high, we would be very grateful.

6.41 p.m.

Mr. Graham Page: I am sorry that the Minister of State is not here at the moment, but I hope that my thanks will be conveyed to him for the way he introduced the Bill. There is in the Water Act a section which does not carry out the intention of either the


then Government or of the then Opposition at the time the Act was going through the House. The House of Lords has decided that the intention, as expressed on several occasions in debates when the Act was going through the House, was not carried out in the wording of the Act and that certain refunds have to be made.
In Committee when the Act was going through this House, I made the intention clear, and it was never questioned by the then Opposition. I said:
The immediate problem is the transition from the system of paying on a rateable value basis, whether one has a service or not. Indeed, one pays whether or not one has a sewerage service or a water service."—[Official Report, Standing Committee D, 12th April 1973; c. 982.]
I made it clear that there was to be a transitional stage in which even those who did not have a service would be paying. I made it clear again on Report that that was the intention. I said then:
There will be a transitional arrangement… That is merely a transitional arrangement, and a temporary measure of this sort will give the authorities sufficient time to be able to set up direct charging arrangements.
If direct charging has to start, or had to start on 1st April 1974 when the new authorities take over, the existing authorities would have an enormous task in identifying all properties connected to the public sewers."—[Official Report, 1st May 1973; Vol. 855, c. 1022.]
That is exactly the position.
It was clearly the intention that, because of the difficulty in identifying those properties which were not connected with the sewer, as the Minister said, we intended to allow a transitional stage. Unfortunately, the wording of the Act did not allow that: it did not carry out our intention. But there is no doubt that it was intended that there should be that transitional period during which a general charge would be made—a charge on all ratepayers based on their rateable assessments, whether they were receiving the service of a sewer or not.
The court having decided that that intention was not embodied in the Act, I stand by its decision in the same way as the Government are doing. It is necessary and proper to abide by the court's decision, but only until it is altered. Indeed, it can be altered by this House. I have never advocated retrospective legislation—that is why I will abide by the decision up to the time it is altered. It

can be altered prospectively or retrospectively. I question the wisdom of the Bill in altering the decision of the court prospectively as well as retrospectively.
I agree that, while the decision stands, the refunds must be made, and in connection with the refunds the Minister has said that the cost will be £60 million. That, I assume, is the assessment of the refund itself. But, of course, if one continues to allow the judgment to stand prospectively, there will still be the increased liability for providing the service as a whole in the normal local government service manner. So I agree that the Bill should not alter the law retrospectively, but I see no reason why we should still hold to the Daymond case in future.
I would have chosen to return to the intention of the Act that there should be a transitional period, and if it has been taken away by the court's decision for these two years, there is no reason why we should not restore that transitional period and allow it to hold good for perhaps another two to three years.
At the same time, I agree with my hon. Friends who have said that the result of the Act in not carrying out the intention of both sides of the House at the time should be spread over a longer period, and not reclaimed from the general ratepayer over a period of only one year. I see no reason why we should put that heavy burden on the general ratepayer, although, of course, it is a measure of how the general ratepayer has benefited out of the unfortunate occupier of property who has not been given a service. But it is a blow and I would have hoped that it would have been spread over a longer period.
Why not return for the future, to the original intention of the Act and of our debates on it, at least for a further transitional period? We were thinking at the time of a transitional period of some five years. Now that the transitional period has been removed entirely, although I abide by the decision removing it for two years past, I see no reason why the Bill should remove it for the further three years. If we allow the transitional period to continue, the only amendment I would require would be that cesspool charges should be credited against the general rate charge. If someone who is not being served with a sewerage service has to pay


not only his general rates but also for the clearance of his cesspool, that is unfair, but there is no reason why he should not be allowed to credit the charge against his general rate payment.
If we continue the general transitional period as intended in the Act, it will allow rate rebate to continue, because the sewerage charge has, up to the present, been included within the general rate demand and, therefore, has had the benefit of rate rebate.
As I said, I am grateful to the Minister for the way he presented the Bill. After all, he is now probably receiving advice from the same civil servants from whom we received advice. We are grateful to them and the parliamentary draftsmen. It is not, therefore, a party matter. It is one of those things that no one on either side spotted at the time, and it has been brought to light only by their Lordships in their judicial capacity. I see no reason why we should not, for the future, go back to what we intended. I do not know why the Minister chose to construct the Bill so as to apply the Daymond case for the future when he could have fulfilled the intentions of both the major parties by restricting it to the past.

6.51 p.m.

Miss Janet Fookes: I was not closely associated with the passing of the Water Act and I therefore listened to my right hon. Friend the Member for Crosby (Mr. Page) with particular interest. The Daymond case is of concern in the South-West, which is where my constituency is located. Mr. Daymond lives close to Plymouth, and he was represented by a Plymouth firm of solicitors. I fully agree that the refund should be paid, the Lords having made their decision, but I take issue with both Front Benches about where the burden of repayment should lay. Here I am enjoying what I believe is called the freedom of the Back Benches. It seems that since the error was made—as both sides admit—through the ambiguous drafting of the Act, in all equity and fairness it is the Government of the day who should foot the Bill. The authorities might well have budgeted differently had they known what the future held, and I do not see why they should be landed with extra payment which at the

time they could not foresee having to make.
I share the view expressed by my right hon. and hon. Friends that it is a stiff penalty to ask that two years' refund should be made in one year. This seems a great burden, as is illustrated by the case of the South Western Water Authority. It estimates that the refunds will be about £3 million, whereas its total net expenditure on general services will be about £18·5 million. That is a pretty fair proportion of the total. It masks the situation for the individual connected ratepayer. Perhaps I may correct the figures which were given by the hon. Member for Truro (Mr. Penhaligon). It is true that the increase will be 35·5 per cent.—more, on average, than last year—but 3·1 per cent. of that increase is due to rising costs, and the rest directly or indirectly to the result of the Daymond ruling. That is still extremely high, however, and the burden will fall very heavily on a number of people whose wages generally are not as high as those paid in the rest of the country.
I am not impressed by the Government's argument that they cannot afford the additional expenditure. At the very least they might have made a contribution and said that they could not do more because of public expenditure requirements. But it comes oddly from a Government who have already vastly extended public expenditure unnecessarily and harmfully on a number of projects—such as the nationalisation of oil and the Community Land Act—which should never have been carried out. If they had not been there might have been more to spare for the unconnected ratepayers.
The Plymouth solicitors to whom I have referred drew my attention to one point that has not been mentioned so far in the debate. It concerns the question of court fees and costs for those who resisted the attempt to make them pay the charges and who were taken to court. I gather that the Caradon council, in the area of the South Western Water Authority, was not prepared to see how the matter went, and it brought cases against individual ratepayers. The Liskeard magistrates' court was not prepared to adjourn the proceedings. Some people, fearing that they might have the bailiffs in to take their furniture, paid up, but found themselves facing court cases for arrears.
This situation should be dealt with by the Bill, but there is no mention of it. I trust that the Minister will give us an assurance that these costs will be covered by an amendment to the Bill in Committee. If they are not, my hon. Friends will certainly table amendments to take care of the matter. This may seem a small issue, but it is of great importance to those who were asked to pay up and who later found that they had no need to do so.
The Minister said that the Bill was designed to deal only with refunds, and therefore did not extend to wider issues. In many ways I regret this, especially since the Government are expecting the water authorities to shoulder the bill themselves. In many cases the water authorities are not given much freedom of financial action—a point that was put forcibly at a meeting between officials of the South Western Water Authority and Conservative MPs and, I believe, MPs of other parties in the House recently. They explained that they could not set aside more than 2 per cent. of their revenues for a capital reserve—rather like the prudent housewife who prefers to save rather than incur hire-purchase debt.
I understand that there are restrictions, either through the Water Act or Treasury directives, which in many instances compel the authorities to borrow longterm when they prefer to borrow short-term. They do not have the freedom of manoeuvre which they would otherwise enjoy, and they have asked that they should have the same freedom of action as do local authorities. It seems ironic that while we are expecting them to pay for the Government's error, the Government are stepping in and limiting the freedom of their financial manoeuvring.
The South Western Water Authority is not the most popular of public bodies. I do not know what is the standing of water authorities in other areas, but I think that my local water authority can be said to be the "top of the unpops". In some cases this is unfair, and in this instance I believe that the authority is more sinned against than sinning. I hope that the Minister will indicate that the Government will look to the financial powers of water authorities, at least in their consultative document, if not in the Bill.

6.59 p.m.

Mr. Tony Newton: I am grateful to my hon. Friend the Member for Daventry (Mr. Jones) for agreeing that I should have a moment or two of his time, and I shall try to be brief. I also declare an interest in that I am non-connected sewerage ratepayer, and, therefore, that I stand to gain financially by the passage of the Bill.
I intend to disturb the general bonhomie which seems to surround the Bill, in spite of reservations, from both sides of the House. I have listened to virtually every word of the debate, and I am far from satisfied that we should not adopt a far more aggressive line towards some of the points which have emerged about the way the burden will be distributed among those who will have to foot the bill.
I welcome the Bill's basic purpose. I supported very strongly the view that it was contrary to natural justice that people who had no sewerage should have to pay sewerage charges. I am very glad that the House of Lords reached its decision.
The technique proposed in the Bill for remedying the situation is probably right. There should be no general charge levied on unconnected ratepayers, and charges on them should fall in respect of specific services, such as the emptying of cesspits. There might be a case for doing it the other way round and making the charge and then deducting specific charges for emptying. However, I suspect from experience in my own area, where some septic tank and cesspool systems need virtually no maintenance and others require considerable maintenance, that such a scheme would continue to leave a sense of injustice.
I have two substantial reservations about the Bill. The first is whether we have got the balance anything like right. Certainly the previous situation was wrong. I made that clear to my constituents last year, but I also made clear my view that the compromise of a 50 per cent. charge was probably about right. Although my home is not connected to the sewerage system, I enjoy the advantages of the drainage system in the surrounding towns where I shop and on the roads where I drive. It would be quite unfair if I made no contribution to that system and to the interest charges and


cost of any extension of the system. It would be unfair if that fell only on connected ratepayers.
If this Bill means that virtually no charge will fall on unconnected ratepayers, the balance is wrong. I hope the Minister can say more about this in winding-up.
My anxieties about financing increased as I listened to the debate. Like my hon. Friend the Member for Plymouth, Drake (Miss Fookes) I do not think it is fair that the cost of remedying this mistake should fall, over a short period, on unconnected sewerage ratepayers. It will cause great injustice. My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) asked whether the Liberal spokesman though there should be an increase in taxation in this situation. I have to say that I believe that is how the matter should have been dealt with. I do not like saying that, but it would have been fairer than what is proposed in the Bill. There is no merit in curing one clear injustice by creating another in the burden these proposals will impose on connected ratepayers.
The force of that argument is strengthened if, as I understand, a substantial part of this £60 million is going to big firms and public sector industries. It will be quite intolerable if my constituents and those of other hon. Members, many of whom are not at all well off, are to be expected to pay a swingeing increase in sewerage charges in order to provide rebates to the electricity boards and Government bodies such as the Royal dockyards. If that is the situation I shall have to think very carefully about whether I can support the Bill., I hope the Minister will tell us how much money is going to large industrial concerns, and especially to the nationalised industries and other parts of the public sector.

Mr. Speaker: Mr. Arthur Jones.

Mr. Keith Stainton: Do I not count, Mr. Speaker?

Mr. Speaker: The hon. Member for Sudbury and Woodbridge (Mr. Stainton) counts very much. Is the Opposition spokesman giving way?

Mr. Arthur Jones: indicated assent.

Mr. Speaker: In that case, I call Mr. Keith Stainton.

Mr. Stainton: I have been here for some time, and I got to my feet before the Opposition spokesman—

Mr. Speaker: Order. That is not the point. The hon. Member must not try that with me. The winding-up speeches were due to begin five minutes ago. The Opposition Front Bench spokesman was kind enough to give way to allow the hon. Member for Sudbury and Woodbridge a few minutes of his time. I know that, as an experienced hon. Member, he will co-operate.

Mr. Stainton: I shall certainly cooperate, Mr. Speaker, but with the reservation, made in all respect and regard, that I stand here as the equal of any other hon. Member, wherever he may sit. I am told by various persons that this is a non-party matter. It is certainly a matter of aggrieved rural residents. Many of my constituents feel that this has been a complete muck-up, right from the start—

Mr. Speaker: Order. I am sorry to interrupt the hon. Member. He knows that it is a long-established custom of the House in these circumstances that he should take only one minute. He would then be playing the game with everyone.

7.4 p.m.

Mr. Keith Stainton: Having prefaced by remarks with those cautionary words and reprimands, I have two points of great substance to raise.
The first is that one can assume that industrial users of water have, in greater or lesser degree—and, I imagine, almost totally—recouped their payments through their own activities. I would not like to think they are going to benefit in any degree from the mechanisms of this Bill.
The second point concerns the financing of water authorities. I hope that in Committee, Back Benchers will ensure that the opportunity is seized to look afresh at the financing of these authorities, at the debts they have inherited—especially the Anglian Water Authority—the origins and definitions of those debts and the financing that is caused to be undertaken long term, via the Public Works Loan Board, which has gravely constricted the financial manœuvrability of these large and important authorities.

7.7 p.m.

Mr. Arthur Jones: This debate has been a somewhat rare occasion. Hon. Members on the Government Benches and my hon. and right hon. Friends are joined in a feeling of non-fulfilment in regard to the Water Act, its original intention and the defective drafting which has given rise to the under standable and deep sense of injustice that we have seen reflected in the debate. There are defects which must be put right, and the House is seeking ways of doing it as equitably as possible. Maybe we are using a rather blunt instrument in trying to solve these problems and, as my hon. Friend the Member for Braintree (Mr. Newton) said, this may lead us into other problems, but I am sure that it was the original intention that a general service charge should be payable in respect of all properties, whether connected or not. My right hon. Friend the Member for Crosby (Mr. Page) made this clear with the extracts that he read from the Second Reading and Committee debates on the Water Act.
I hope that my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) will not feel that I am being a little harsh if I say that he was making his judgment with the benefit of hindsight. Many of us recognised that it was inequitable that people whose properties were not connected to a sewerage system should pay the full charge. We had an Order last year which reduced the general service charge for those properties to 50 per cent. That was an endeavour to meet what was recognised to be an inequitable situation. However, the Order needs validation and I am not sure whether the Bill adequately covers that point.
The Daymond case revealed the inadequacies of the draftsman. It is a narrow decision, which has been described as wobbly, but nevertheless I am glad that is binds the Government. I am not sure that it would be wise for the general body of taxpayers to be required to meet the bill. It is said that the Government should find the money, but the Government can find money only at the expense of the taxpayer. There has been considerable advocacy in that regard, but it is against the basic philosophy behind the Water Act, which is that the consumer should pay for the services he receives. For the Government to meet the £60 million at

the taxpayers' expense would mean a subsidy to the consumer. I am sure that I speak for most hon. Members in saying that we should not get involved in subsidies for services under the Water Act.
In coming to that reduction of 50 per cent. of the general service charge, it is recognised that the cost of meeting drainage facilities in highways and open spaces amounts to about 30 per cent. of the general service charge. I have some sympathy with what my hon. Friend the Member for Braintree said. If we take into account the common benefit element of 2 per cent. or 3 per cent. and add to that the highway drainage charge of 30 per cent. we reach 32 per cent. or 33 per cent. against the charge of 50 per cent. levied under the 1975 Order.
My hon. Friend the Member for Bournemouth, East (Mr. Cordle) advocated that the refund should be made at the taxpayers' expense. On reflection, I think that he will not regard that as the right decision, having regard to public expenditure and the purpose behind the Water Act.
The Minister said that the water industry is now a nationalised industry. On that I am in conflict with him. It is a public utility, regionally autonomous, under 10 regional water authorities. It is in no way analogous to a nationalised industry. There is a large content of the private water companies in the service. The Minister may be trail blazing. He promised us a discussion document in a few weeks' time and that may be a slight lifting aside of the curtain.
Grave concern for the level of water charges has been expressed in every speech. My hon. Friend the Member for Norfolk, South (Mr. MacGregor) dealt with the position in the area of the Anglian Water Authority, in which my constituency lies. He mentioned a 31 per cent. increase in the general service charge, which arises from the Daymond decision and increases the charge for 1976–77 to 51 per cent. instead of 20 per cent.
I entirely agree with my right hon. Friend the Member for Crosby, who dealt at length with the emptying of cesspools, that that matter should have been dealt with in the original Bill. There is great variation in the level of charges.


The Minister will probably be considering that in his paper. For example, in my constituency, the district of South Northants charges £9·50 per load or part of a load consisting of not more than 1,000 gallons, but the Daventry district, which is also within my constituency, makes a standard charge of £20 for each emptying. It is a hardship that under the original Bill people were expected to meet the charges of cesspool emptying beyond the general service charge.
Health and social security are essentially dependent upon a proper water and sewerage service. What hope would the Under-Secretary of State for the Department of Health and Social Security have unless the regional water authorities were effectively carrying out their duties? I am delighted to see the Under-Secretary of State here. I am sure that he will deal with these points of detail.

Mr. Denis Howell: My hon. Friend is now in the Welsh Office.

Mr. Jones: I recently chaired a Committee in which the hon. Member for Rhondda (Mr. Jones) was performing his duties for the Department of Health and Social Security. I ask his apologies. He has wide experience of Welsh affairs as the hon. Member for Rhondda.
The problems of repayment, identification and the non-connected have already been mentioned, as have the questions of persons who have moved, the deceased, and companies in liquidation. Surely there is some limit to the scope of the exercise. Will there be a continuing liability on water authorities for an indefinite period? All the repayments could not possibly be made in the first year. Is it suggested that there should be a terminal date beyond which no more repayments will be made? Will the regional water authorities rely on the six-year limit under the Statute of Limitations?
The cost of recovery will be a serious matter. What about the refund arrangements? Will they be devised in such a way as to avoid problems in the payment of rates by instalment? That is an added complication that will have to be dealt with.
The common benefit element is only 2 per cent. or 3 per cent., and it covers pollution, recreation, conservation,

amenity, fishing and navigation. There is a need to secure rising standards in our rivers and watercourses. Will the common benefit element be collected by the regional water authorities or will it be levied by the local authorities as part of the rate payment? The former is preferable. It is simpler, it moves towards direct charging—which is a likely decision by the regional water authorities—and it is in no way related to the rate demand.
We are awaiting the departmental review, which the Minister of State promised within the next few weeks. That will deal with the difficulties of regional and national equalisation. We hope to make progress on the method of charging on the basis of water used or effluent discharged, and the issue of cesspool clearing.
It is generally recognised that the Water Act 1973 provides a sound basis for the whole hydrological cycle, and I pay tribute to those who originally conceived and implemented it and are now operating it. The Act is rightly recognised as providing a sound basis for water resources policy, for the adequate provision of sewerage and sewage disposal, and for raising standards in our rivers and estuarial waters. It has proper regard to land drainage and flood protection. The new structure co-ordinates water recreation and amenity, including fishing, and the regional water authorities, with the guidance of the Water Space Amenity Commission, are actively pursuing these ends.
Clearly, there is a need to make progress, ease the administrative problems, and provide adequate time for the heavy work load that will be associated with the provisions of the Bill. I hope that the Bill will receive a fair wind.

7.20 p.m.

The Under-Secretary of State for Wales (Mr. Alec Jones): Despite the fact that I have little time, I made a promise to my constituents that provided I am in order—and I trust you will so rule, Mr. Speaker—as the hon. Member for Rhondda, your home town, I would convey to you the first time I spoke from this Box the best wishes of all the people of Rhondda on your new office.
In the main the House has accepted that the Bill is necessary. I do not believe


that everyone welcomes the Bill, because most of us wish that the situation which caused it to be present had not arisen. The attitude of most hon. Members is that the Bill is inevitable following the High Court ruling in the Daymond case. Time will not allow me to answer many of the questions which hon. Members raised or comments on the general aspects of water. Therefore, I shall confine my remarks specifically to the contents of the Bill in the name of haste, speed, and all the rest.
There is little dissent from the main purpose of the Bill, which is that people should receive refunds of any illegal charges which they paid during the years 1974–75 and 1975–76. It is right to say that those charges were not imposed by any malevolent act of any wicked water authorities, but were charges imposed by responsible authorities which believed that they were acting legally and in accordance with the wishes of this House. Although it is tempting, I shall resist the temptation to say that it is the fault of and blame Opopsition Members. All those who were Members of the House at the time the Act became law bear some responsibility for failing to see that what we thought we were passing was not, in fact, what we wanted.
I am glad that the hon. Members for Ashford (Mr. Speed) and Daventry (Mr. Jones), in accepting the Bill in general terms, reject any idea of retrospective legislation and any increase in public expenditure. By and large they believe that the Bill is on the right lines. The hon. Member for Ashford, together with other hon. Members, mentioned the phasing of increases. That was certainly considered, and the Bill will allow it. However, water authorities do not want to do this because it will increase total costs. If we agree that water authorities are responsible authorities, it follows that they must make a judgment in this case. The important point is that if the costs are spread over two or more years, the total cost will be much higher because it will result in deficits and interest charges to cover them. The water industry has paid its way so far, and it would not be wise to encourage it to get into a deficit situation.
The hon. Member for Ashford raised many technical points, and I assure him that we are thinking along similar lines

because not only Ministers but all involved in the Bill are striving to ensure that we get it right this time and are not caught in a subsequent Daymond case. We are examining the specific and detailed points which the hon. Gentleman raised, many of which are in hand at present. He referred to the effect on those who have moved homes, which is of some concern to the general public. In most cases refunds will go to the present occupiers. People will get back only what they paid, so if previous occupiers submit claims—and Government publicity will be given to this—they will get their refunds and present occupiers' next bills will be adjusted accordingly. It is the intention to ensure that as far as possible those who move will not suffer as a consequence.
Concern was also expressed about local authorities. The refund schemes were discussed with local authority associations. They suggested that the refunds be made as credits against the 1976–77 rate demands, because that would involve the minimum administrative burden. Therefore, we have sought to devise a scheme which was acceptable to and easily administered by local authorities. I understand that hon. Members have expressed the view that there could be burdens on local authorities. We have consulted the associations and have adopted their views in this matter. The hon. Member for Folkestone and Hythe (Mr. Costain) was concerned that local authorities would have difficulty in deciding where these unconnected domestic properties are situated. We are advised that local authorities know where most of them are at present. Therefore, we do not consider that that is likely to present a difficulty.
I turn to the question of making the relevant date 1st April. Clause 1(1) says:
On 1st April 1976 it shall become the duty of every water authority to refund—".
That duty does not require to be instantaneously discharged, but we hope that there will not be any appreciable delay before these refunds are made for the sake of those receiving the refunds and for the sake of getting the whole matter cleared up.
I say to the hon. Member for Carmarthen (Mr. Evans) that as a result of my recent travels in Wales I believe that many Welsh people who live inside the


boundaries of the Severn-Trent Water Authority will not be quite so enthusiastic about coming inside the boundaries of the Welsh National Development Authority. As a consequence of the Daniel Report, the consultative document will be published shortly and the hon. Member for Carmarthen will have the opportunity not only of judging, but of giving his own views about, the proposal contained in that document. The hon. Gentleman, in common with many other right hon. and hon. Gentlemen, referred to the high costs involved. He did not take fully into account the increase in the domestic rate relief as it applies in Wales.
In Wales that relief runs at approximately 30p in the pound. There was also a special rate relief paid in 1974–75 to domestic ratepayers whose water, sewerage or general rates would otherwise have been even higher than they are at present. There was some provision made to deal with the ever-increasing burden.
Several hon. Members referred to rate rebates. There are no rate rebates for water service charges. The poorest members of our society are taken into account through supplementary benefits. The hon. Member for Plymouth Drake (Miss Fookes) referred to compensation. The Bill is about the refund of sewerage charges and not about compensation for other costs. Her suggestion would take us into deep water. It is somewhat difficult

to draw the line on this matter, but we shall examine the matters which the hon. Lady raised.
I was asked about the costs of emptying cesspools. I am not an expert on the emptying of cesspools, but I am advised that I cannot give a figure for this because it varies considerably throughout the country. In some cases cesspools are emptied by the local authority, in some cases the water authority, and in other cases they are even emptied by private contractors. I have tried to give the hon. Member for Bury St. Edmunds (Mr. Griffiths) a meaningful answer, but am unable to do so.
My hon. Friend the Member for Meriden (Mr. Tomlinson) made a fairly substantial attack on the Severn-Trent Water Authority. It is not for me to defend that Authority, or any other. The Government have no powers to make directions to water authorities about the levels of their charges. What we have shown quite clearly is that we have tried to introduce—

Mr. Speaker: Order. In accordance with the Business Motion passed earlier, I must now put the Question, That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Snape.]

Committee tomorrow.

COMMON AGRICULTURAL POLICY

7.30 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart): I beg to move,
That this House takes note of Commission documents R/3166/75 and R/3271/75 and, in respect of R/3166/75, of the Government's intention, taking account of the needs of producers and consumers and the importance of restraining public expenditure, to seek both satisfactory levels of agricultural support prices and further improvements in the operation of the common agricultural policy, especially in the milk and cereals sectors, and to maintain the provision for variable slaughter premiums in the EEC beef regime along the lines of the arrangements secured as part of the renegotiated terms of EEC membership.

Mr. Speaker: I have selected the amendment in the name of the right hon. Lady the Leader of the Opposition. With that amendment the substance of the amendments in the names of the hon. Member for Cardigan (Mr. Howells) and the hon. Member for Southampton, Test (Mr. Gould) can be discussed. Those amendments are, respectively, at end add
but regrets the continued existence of the Green Pound, which is a major impediment to fulfilling the expansion envisaged in the Government's own White Paper, 'Food from our own Resources'.
and at end add
and urges Her Majesty's Government to oppose proposals for the compulsory use of skimmed milk powder in compound animal feedingstuffs".

Mr. Peart: The issues that we shall be considering in our debate this evening are many and complicated. We must all be grateful for the work done by the Scrutiny Committee in producing its clear and helpful Report. As one who has appeared several times in front of the right hon. Member for Knutsford (Mr. Davies) and his colleagues on the Committee, I say to the right hon. Member that I have always found it a pleasure. I have often heard it said by some Ministers, of all persuasions, that sometimes it is a bore to go to certain Committees. However, I find it a worthwhile experience, because the Committee has been constructive, and my staff and civil servants who accompany me have always been received with great courtesy. It has been a successful operation. I am grateful for the work done by the committee.
The Report itself identifies the main aspects of the European Commission's proposals on Community agricultural support and prices for 1976–77. I shall try to deal with each of the sectors to which the Scrutiny Committee has drawn attention.
It is clear from the motion that the Government have tabled for our debate that more is at issue in the negotiations in Brussels than the level of support prices in 1976–77. The level of support prices is important enough. We are also concerned, however, to follow up our stocktaking discussions last year. We want to see further improvements in the operation of some of the more important commodity regimes in the Community.
I should like to deal with the Opposition amendment quickly, as it has been mentioned by Mr. Speaker. Naturally, the Government always attach importance to maintaining the competitiveness of United Kingdom agriculture. In the forthcoming negotiations I shall certainly be concerned to avoid arrangements that would undermine our industry's competitive and structural advantages. I have no difficulty in accepting the amendment.
I have set out on earlier occasions the Government's general approach to agricultural support in the Community. The common policy should provide effective support to efficient producers without imposing undue burdens on either consumers or taxpayers. For this reason we have always emphasised the need to fix support prices in a way that takes account both of the needs of efficient producers and of the market situation for individual commodities. We have to set prices that ensure as far as possible that there is no shortage for consumers. On the other hand, the accumulation of structural surpluses for which there is no effective demand is wasteful. I think that there is agreement, certainly in our industry and in the House. This is not in any way a matter that divides the two sides of the House, because there is agreement here.
For some products within the Community the imbalance between supply and demand could be so serious that changes in the support regimes are necessary as well as restraint in the level of support prices.
I now turn to the Commission's 1976–77 proposals. In these proposals the


Commission has made an effort to respond to the problems. I think that it was wrong to propose the phasing out of the beef premiums and I have stated in Brussels that I cannot agree to this. Indeed, I have reported back to the House on this matter and have declared my policy and my intention. Otherwise, however, the Commission does seem to me to have addressed itself to the major issues, particularly in its package of measures in the milk sector and in its approach on the intervention price for feed wheat. We have some reservations whether the Commission has always satisfactorily followed through the logic of its own analysis. Moreover, we need to examine closely whether many proposals would be cost-effective and practical.
I turn first to the proposed average level of increase in support prices, of 7·5 per cent. in terms of the unit of account. I was glad to note the Commission's efforts, in assessing the necessary level of support, to estimate the requirements of modernised farms. This was discussed in the stocktaking document. We have always stressed it. I declared it to be one of my aims in securing improvements, and I believe that the CAP is better for this.
The Commission's work to improve this aspect of its price proposals is to be encouraged. Because of other elements in the package, such as the proposal on skimmed milk powder intervention, effective support prices even in units of account may not rise by as much as 7·5 per cent.
We have also to recognise that the effective increase in support prices in most member States will be considerably less than 7·5 per cent. in terms of their national currencies, because of the proposed monetary changes. Indeed, only the United Kingdom, Denmark and the Irish Republic would have the full increase in their farmers' common support prices in national currencies. None the less, the increases proposed in Community prices seem to us to be on the high side and, in the forthcoming negotiations, we shall continue to look for restraint.
The Commission's monetary proposals are primarily of interest to other member States. The Scrutiny Committee rightly mentions that no change in the green pound is proposed, but I should remind the House that the Government have

made four changes in the green pound since October 1974. We made three changes last year. The sterling monetary compensatory amounts are now only 6·4 per cent. and have been steady at that level for some time.
Decisions on the green pound always involve a difficult balancing of different interests, because of the effect on food prices. We shall continue to keep the level of the green pound under review. We have shown that, when the need is there, we are ready to act.
I turn now to specific commodities. I start with beef. Last year, as part of renegotiation, we secured revision of the EEC beef regime to enable premiums to be used as an alternative to complete reliance on permanent intervention. The new arrangements have worked well this year. We have avoided the waste of excessive support buying. Consumers have benefited, and so have producers, who have had more assurance on the level of their returns.
The European Commission has now proposed to phase out premiums for the next marketing year. It foresees stronger prices and, in the forecast market situation, it does not think that premiums will be necessary. I have made clear that I do not accept this reasoning. Provision for premiums is necessary. If, contrary to what the Commission expects, market prices are inadequate, we do not want excessive intervention. We need to assure producers that their returns will be made up to satisfactory levels.
The Council in Brussels has no doubt where I stand. The House, also, can be confident that I want to see arrangements that do not rely solely on permanent intervention—support buying—and which provide for premium payments to producers if market prices are depressed.

Mr. Douglas Jay: Will my right hon. Friend give an undertaking that for all the reasons he has given he will not agree to the phasing out of the variable premiums system?

Mr. Peart: I have repeated my position. I do not know why my right hon. Friend should be anxious. I believe that I have the support of all hon. Members. I am glad to say that I have the support not only of the National Farmers'


Union but also of its European equivalent—COPA. I am supported by a strong body of opinion. I am grateful to have the support of my right hon. Friend and others. This is a matter for negotiation.

Mr. Neil Marten: If it is a matter for negotiation, what is the area of negotiation?

Mr. Peart: The hon. Gentleman questioned me on this issue in the Scrutiny Committee and he must accept what I said. I made clear what I want to secure, and I cannot go beyond that. I cannot be tied to every comma in the negotiations. I have given a forthright declaration. I am rather surprised that some hon. Members still want to fight some of the old battles of the past.

_Mr. Nigel Spearing: We want change.

Mr. Peart: I have said that I have achieved change in the CAP. In the renegotiation I achieved the variable premium system. Despite what the Commission has said, I intend to fight for that system. I believe that it has worked well for British farmers. I cannot go beyond that. I hope that hon. Members will realise that I am grateful for their support on that issue.
I turn now to the question of milk. The Community faces a serious problem of over-production of milk products, particularly skimmed milk powder. A combination of measures is necessary. I am naturally concerned that any proposals should not bear inequitably on producers here. Within the Community system there should be an expansion by our efficient producers, notwithstanding the need for restraint on Community support and for a better balance of supply and demand on the Community market as a whole.
The Commission has put forward a very complicated package. It has proposed a below-average increase on support prices and its implementation in two stages. There would be a 2 per cent. increase in the target price for milk in March and a 4·5 per cent. increase in September. Because of monetary changes, dairy farmers in most of the Six would get no effective increase at all until September. The two-stage approach is a

sensible recognition of the higher costs of winter production.
In September, the intervention arrangements for skimmed milk powder would also change. Fixed-price intervention would stop. Instead there would be a tendering procedure, and support buying prices would be liable to vary within a range according to available supplies. This is a move to more flexible intervention, in line with our stocktaking objectives. I know that producers have expressed some concern. Some action, however, to discourage production for intervention is essential.
I shall certainly be concerned to ensure that the Council's decisions on support prices and the intervention mechanisms adequately reflect the serious imbalance in this sector. The restoration of a balance in the market is the best longer-term assurance that our own milk producers can have.
The Commission has also proposed a scheme to encourage producers to stop sales of milk. The so-called non-delivery premiums would apply to farmers producing as much as 120,000 litres of milk. Such farmers might have up to 30 cows. I think that the scheme, if adopted, needs to concentrate on smaller producers. As proposed, its coverage seems too wide. Moreover, there are many administrative problems which must be solved. We are still examining in Brussels whether the scheme would be cost-effective or practical.
The Commission has also made proposals intended to reduce the accumulated stock of skimmed milk powder and to stimulate consumption in various ways. An important and controversial feature is its plan for the incorporation of skimmed milk powder in animal feed for a limited period.

Mr. John Watkinson: On the question of milk production, which is of some concern, how does my right hon. Friend marry up the undertaking given in the White Paper about the expansion of milk production and the possibility of adopting proposals from the Commission that we should cut back milk production? How does my right hon. Friend think that the Commission's proposals will affect our milk industry?

Mr. Peart: I know that my hon. Friend takes a deep interest in these matters. He will know that I have been questioned on this specific matter over and over again. I see no inconsistency in a policy that enables our efficient industry to produce more milk and to increase production even though milk products on the Continent have accumulated. We have not been responsible for that accumulation. There is no contradiction, and that is known to the Community.
Although there is a need to stimulate our own production, there is some controversy about the incorporation of skimmed milk in animal feed. The scheme will be for a limited period. It is designed to dispose of about 600,000 tons of powder. Livestock producers whose feed costs will be increased are understandably concerned, as are the feed manufacturers themselves. There are problems of principle and practice, including the consequences for overseas suppliers.
The Commission is considering some alternative mechanisms. I must emphasize, however, that the disposal of these stocks inevitably involves considerable cost. That is not just true for the Community; it applies to New Zealand, Australia and America. Many other countries throughout the world have a skimmed milk problem. It is not something peculiar to a wicked Community and a harmful CAP. The accumulation of skimmed milk stocks has occurred in many countries throughout the world.

Mr. Andrew Welsh: Will the right hon. Gentleman give the House an indication of the amount of money that is involved in this process?

Mr. Peart: Much depends on the market price at which producers are able to dispose of it. There is over 1 million tons of skimmed milk. That is a considerable amount. I can get the figure, but I do not think that I can give an accurate answer immediately. Outlets for the powder other than for animal feed are limited. The Commission has proposed raising to 200,000 tons the Community's disposal of skimmed milk powder for food aid. This is clearly to be welcomed. The basic issue in considering the Commission's proposals for the disposal of skimmed milk powder in animal feed is

whether there is a better method or a fairer way of distributing the costs. I shall be interested to hear what is said in the debate.
We are disappointed by the Commission's proposals for the butter subsidy.

Mr. Marten: When the right hon. Gentleman appeared before the Scrutiny Committee, and when we were discussing the extra 200,000 tons going to aid, he told the Committee that it had not been decided whether it was additional aid which had to be paid for on a supplementary budget estimate or whether the cost had to be taken from existing aid. Has the financing of the extra 200,000 tons been resolved?

Mr. Peart: No. This is a detail which still has to be worked out and finalised. [HON. MEMBERS: "Oh."] I do not know why hon. Members are chortling. We are discussing basic proposals, many of which will be accepted or modified in negotiation.
I shall be in Brussels on Monday, Tuesday, Wednesday, and possibly Thursday, of next week. I am not saying that we shall achieve a final result, because that may come in the next session, but these matters will be carefully scrutinised and discussed. Although I am talking about the Commission's proposals, I do not assume that those proposals will remain as they are now. There may be modifications. However, we shall discuss costs including the cost of the food aid proposal. I shall report back to the House when we reach a final decision.
As I have said, we were disappointed at the butter subsidy proposal. The net effect of the proposal would be to reduce the contribution from Community funds to our subsidy. I have pointed out in Brussels that we face serious public expenditure constraints and that any cut in our butter subsidy could adversely affect the outlet for butter here. This would be to the disadvantage of our Community suppliers. I hope that the Commission's proposals can be reconsidered.
The Scrutiny Committee has also drawn attention to cereals. The Commission has tried to establish a new pattern of support prices. Its detailed proposals are closely interrelated. The intention is to remove the need for a denaturing subsidy and to reduce the


incentive to put feed grains into intervention. I welcome the basic principle that feed grains should be supported at feed level. It seems to me sensible to reduce the basic wheat intervention price with a view to aligning this more closely with the maize and barley intervention prices. Too high a level of wheat support, when applied to high-yielding feed wheat, imposes unnecessary costs on livestock producers and, through them, consumers.
I question, however, the size of the Commission's proposed increase in the target prices for cereals. These target prices affect the level of the Community's threshold or minimum import prices. The Commission has proposed increases of up to 9·5 per cent. In my view, the Community should not put up unnecessary barriers against imports.
I have also questioned the Commission's proposals on breadmaking wheat. We are not clear how the Community will be able to differentiate in practice between feed and breadmaking wheat. This is a very complicated and difficult area. I shall certainly be concerned to secure that if arrangements are introduced they will be fair and practicable and set at a sensible level.
I think that we have made some progress in our general objective of seeking improvements in the operation of the common agricultural policy for some of the commodity regimes in the Community. We shall pursue this vigorously in the present negotiations on support for 1976–77. It is equally an essential national objective to maximise our receipts from Community funds. We have been successful in achieving this recently. In 1975 our expected total receipts from the guarantee section of the Community's agricultural budget are £339 million.
By far the greater part of our receipts were Community payments which benefited our consumers—in particular, the Community payment of our import subsidies on food, the contribution to our beef premiums, the special import subsidy on sugar, the contribution to our butter subsidy, and Community expenditure on our social beef subsidy. In 1975 our receipts from Community expenditure on the common agricultural policy exceeded our contribution, leaving us as net beneficiaries.

Mr. Bryan Gould: Do the figures given by my right hon. Friend represent gross or net receipts? Do they take account of our contribution to the funds that produce those payments?

Mr. Peart: Of course they do, and I have said so on previous occasions.
I have drawn to the attention of the House some of those points on which we should like to see changes in the Commission's proposals on agricultural support. I shall press hard for these changes—in particular, on the beef premiums—in the negotiations later this month.
We should recognise also, however, that there are good features in the Commission's package. It would produce a saving of about £92 million on the Community's agricultural budget in 1976. After taking account of changes in receipts, the United Kingdom's net contribution in 1976 would be about £25 million lower than it otherwise would have been. There is the prospect of useful changes which would restrain the level of support on feed wheat and skimmed milk powder.
The proposals are estimated to result in an increase of only 1 per cent. in the food price index here by the end of 1976.
Our efforts to maintain—or, if necessary, to restore—the balance in the markets for individual commodities must continue. Tackling the imbalance in the dairy sector is particularly important. Overall, the common agricultural policy will develop and evolve in response to circumstances from year to year. I shall certainly take careful note of the views that hon. Members may express in this debate. I shall bear them in mind in the forthcoming negotiations in the Council of Ministers.
I hope that the Council will be able to reach decisions at the meeting on 23rd and 24th February and I shall of course report them to the House at the earliest opportunity.

7.58 p.m.

Mr. Francis Pym: I beg to move, as an amendment to the motion, at end to add:
'and urges Her Majesty's Government to ensure that the competitive and structural advantages of United Kingdom agriculture are maintained'.


I wish wholeheartedly to endorse the thanks conveyed by the Minister of Agriculture to my right hon. Friend the Member for Knutsford (Mr. Davies) and his Committee for the way in which they have discharged the onerous responsibility placed upon them by the House. The fact that they have given the House an immensely helpful report, which so assists hon. Members in seeking to deal with European legislation, is to their lasting credit.
I am grateful to the right hon. Gentleman the Minister for saying that he is prepared to accept the Conservative amendment. I am sure that it expresses the correct spirit, and it is a relief to the House to know that he will approach the remaining stages of the negotiations on the basis of the words we propose to add to the Government's motion.
I am certain that it is right that we should have this debate at this stage before negotiations have been concluded so that the Minister can take heed of the views of the House. We agree that the right hon. Gentleman and all successive Governments will continuously be involved in improving the common agricultural policy. There may have been a little disappointment in the sense that a number of questions raised with the Minister in the Select Committee were not accurately clarified. I wish now to repeat some of those points. The documents cover a very wide field. Naturally, I cannot possibly deal with all of them, but I want to make some general observations and to raise some questions on particular aspects of the Commission's proposals. We know that the negotiations are in progress now, and it is hard to exaggerate their importance.
Far from wishing in any way to damage the right hon. Gentleman in the negotiations, I want positively to put more fire and resolution into him to strengthen his hand. I wish it were stronger already. Indeed, I wish the Government of which he is a member had taken a different attitude to the European Community all along, but that is past history. We all, whatever our views, want him to conclude the best possible package for our producers and our consumers alike, for they share a joint interest, and it is a matter of balance. I have never liked the way in which the responsibility was

divided between the Minister and his right hon. Friend the Secretary of State for Prices and Consumer Protection, but that is how the Government decided to do it.
The review is extremely important, because 1974 and 1975 were painful years for agriculture, for horticulture and for fishing. The decline in farm incomes has been marked—perhaps 30 per cent. in 1974–75, and probably not up in 1975–76. It could even be down. There has been too little investment, and there is too little potential for increased income, but, hopefully, 1976 will see a recovery. That recovery must be the start of a long-term process of regeneration in the industry.
The review and these negotiations provide the opportunity for the Government to make their own White Paper a reality. I say that despite what the Minister said about the possibility of surpluses of certain commodities in the Community. The White Paper last year was a non-event, and at this review the Minister has to turn that non-event of 1975 into a gold medal for 1976. Unless he does, there will be no restoration of long-term confidence. Happily, the immediate situation in farming is not as bad as had been predicted, because we have had a very mild winter once again.
Nevertheless, there is a lack of long-term confidence, nor, unless the Minister gets a satisfactory review, can we look to that expansion which the Government themselves want, no less than the Opposition. The publication of the White Paper, without action at the same time to give it effect, has made the situation worse today, because that White Paper raised expectations which have not so far been realised. I think it will cost the Minister more now to live up to those expectations than if he had taken action earlier.
There are two matters of overriding importance at this juncture—a reduction in taxation, and fair prices for food that is economically produced. These two go inseparably together, and are fundamental to any sound policy for agriculture. Therefore, the Chancellor of the Exchequer is involved—and, indeed, the Labour Party—in its present excessive mood of anti-capitalism. Incidentally, I hope the right hon. Gentleman will take


the first opportunity to assert in public in forthright terms his opposition in principle to any suggestion of nationalisation of the land.
The spirit and basis of the European Community is that of fair competition in trade. Therefore a broad equality of taxation between member States is a basic requirement. The levels of taxation are not now equal, and the Chancellor of the Exchequer must have regard to this fundamental imbalance.
This leads me to the first specific matter in these documents that I want to raise—

Mr. Norman Buchan: Is the right hon. Gentleman's suggestion that we should cancel the various fiscal and taxation measures that we have regarded as necessary for the well-being of the people of this country, in order to harmonise with the Common Market?

Mr. Pym: If the hon. Gentleman thinks that the present level of taxation is for the benefit and welfare of the people of this country he really has a very funny view of how things stand. I do not think that anybody else here takes that view.

Mr. Buchan: With respect, the right hon. Gentleman did not answer the question. I, too, should like to change the taxation system, although the way I should like to do it would not be welcome to Conservative Members. My point is that the decisions made by the Government of this country in their taxation and fiscal policy are designed, rightly or wrongly, to serve the interests of the people of this country. Is the right hon. Gentleman saying that these decisions should be rejected in the interests of harmonisation?

Mr. Pym: I do not mind on what basis it is done, but taxation in this country overall, taking all taxes together, is higher than in any other member State. That is unreasonable, unfair and absurd. Although it is not particularly related to agriculture, it affects agriculture, just as it affects everybody else, and it is completely fundamental to the basis of fair competition. Unless taxation is reduced all round, and the threat of further taxation removed altogether, there will not be very much left of the United Kingdom.
Turning to the monetary measures, the Minister referred to the green pound, and we acknowledge that he has made a number of adjustments. We have thought that they were not always enough, or always at the right time. The Minister says now that he will keep the matter under review. I hope that when he adjusts it next time it will not be too late. Even though he has made many adjustments, it might have been better if he had made bigger adjustments less often, but in any case the feeling of unfairness remains. The feeling of resentment in the industry still exists.
British farmers, thanks to their own hard work and to the support of successive Governments, have achieved a competitive and a structural advantage that is a really valuable asset to the industry. We know what efficient producers they are, and how high is their productivity. I have no doubt that their structural advantage is one reason why they consistently, from the early 1960s onwards, supported the proposition that the United Kingdom should join the European Community, but many of our farmers are getting a feeling now that, through no fault of their own, they are being denied some of those advantages. They had no cause or reason whatever to expect this in advance.
I know that the compensatory amounts are designed to reduce and compensate for currency differences. Nevertheless, misalignments persist. Misalignments distort trade, and not only for producers. Butter is an example. Germany has been able to become a big exporter of butter, and will very likely supply as much of our own market this year as we do ourselves, if not more.
Bacon and ham are other examples. Our producers are under-cut, due to misalignment, by 3p or 4p a pound in the case of bacon, and 7p or 8p a pound in the case of ham. One of the consequences of this is that redundancies are being caused in the manufactured meat products trade. Incidentally, the profits of these traders are being squeezed in some cases virtually to zero.
There is no doubt that the green pound is distorting competition to our disadvantage, and this poses a real threat to the increased production of home-grown food.
As sterling has declined against other currencies, our industries have benefited with their exports—except for agriculture, which has special constraints upon it. There are growing opportunities in Europe, as well as elsewhere, and it is in the national as well as the agricultural interest to expand exports. I am glad that the Government are taking action in this connection. The export drive has my support, but the green pound is relevant to it.
This brings me to the proposed price increases. I have already mentioned the decline in farm incomes over the last two years, some of it certainly due to the weather, but the inflation of costs certainly cannot be laughed away. That inflation has been severe and merciless. It has affected wages, machinery, fertilisers, and very nearly everything else. Those increases have not been recovered through prices, which have failed to keep pace. Rising costs just cannot be ignored.
Hon. Members will have seen a month or so ago an article by Lord Rothschild on wheat. He estimated that the cost of growing an acre of wheat is £102, and that on average yield it requires £76 per ton to show a profit. Let us look at the figures contained in these documents about the relative increases in costs in the member States of the European Community. In the United Kingdom last year the figure was up by 13·2 per cent. The next highest was France, with 10·5 per cent. The next two, Germany and Belgium, were only just half the increase in United Kingdom costs and, in the case of Denmark and the Netherlands, they were a third.
That cannot be laughed off. It is all very well for the Consumers Association to speak of the rising problems of food prices, which are very real, but they cannot be explained away from the point of view of the farmers getting too much. Although the great campaign launched by the Secretary of State for Prices and Consumer Protection may be marginally helpful it is a great mistake to expect too much from it in the light of escalating costs. Unless the end prices are realistic we cannot get expansion, and the supply of food itself could be put at risk.
I do not think that the 7 per cent. to 8 per cent. proposed increase will be

enough to recoup the higher costs. The Minister said that he hoped for a lesser figure, and I notice that a number of speakers in the European Parliament thought that 9·5 per cent. was a more realistic figure. I think that something in that direction is more appropriate. We can look, too, at consumer prices and the increases there in relation to our neighbours and friends in Europe. In 1974 the increase over 1973 was 16·1 per cent., which was broadly at the average level of other countries in the Community—slightly higher, but somewhere near the average. In 1975, over 1974, we are far and away the highest with an increase of 26·6 per cent.

Mr. Buchan: We did tell the right hon. Gentleman.

Mr. Pym: The hon. Gentleman likes to think that this is because we have joined the Community. It is not. It is due entirely to the economic policy of this Government. It is due entirely to their laxness on the economic front in 1974 for political reasons. It has nothing to do with our joining the Community.

Mr. Jay: The right hon. Gentleman knows that that is nonsense. One of the reasons for the rise in food prices here was the inevitable increases that we had to make in the prices of butter and cheese, for instance, as a result of the Treaty of Accession.

Mr. Pym: I am afraid that I do not accept that argument. Let me give the House the figures. The increase in consumer prices in the United Kingdom last year was 26·6 per cent. The next highest was 18 per cent., which was in Ireland. The next was in Italy, with an increase of 13 per cent. In all the other countries it was less. The highest of all was in the United Kingdom, and that is the end product of galloping inflation. The producers of our food were not responsible for that. They have suffered as much as any; we know that their incomes have fallen.

Mr. Buchan: Taking the amount of saving on costs due to the ACAs and MCAs, during the year 1973–74 it was of the order of £1,200 million on food prices, which means that in two years we have had to put an additional £1,200 million on food costs.

Mr. Pym: I am sorry, but I do not accept that. Nor could it conceivably account for the incredible differences in 1975 in consumer price increases.
I want now to say a word about cereals, although I shall be brief on this because, broadly, I agree with the Minister. The proposal to align cereal prices more realistically with their feed value is logical and capable of development, but the obvious problem with the two-tier system is how to identify the bread-making and feed qualities of wheat. Unless this question can be answered I do not see how the scheme can work. This is of especial importance in the United Kingdom where our grain is stored on farms, where sales take place throughout the year and where every bin will have to be correctly identified. The Minister said that they must find a fair system. They must find an accurate system, which can be accepted and thought completely fair by every farmer in the country, and a method which is reasonably simple to operate. Experiments are being done on this, but is not there a case for postponing the introduction of such a scheme? I should have thought that that could be achieved, because obviously more work needs doing on it.
The other point on cereals is that there has been circulated to right hon. and hon. Members a short paper from the National Farmers' Union indicating that the United Kingdom guaranteed prices for wheat, barley and oats are due to end this summer. If that happened it would mean that the floor of the market would be provided by intervention prices. I am sure that the Minister will be able to give the House an assurance that if the United Kingdom guarantees are phased out or abolished there will be no question but that the Government will operate the intervention system, and no question of a unilateral abrogation of the system will be considered. I am sure that that is an undertaking which is required.
Next, I come to milk. Again I agree with the Minister that the seasonal target price is a sensible move. It is no new idea to dairy producers in the United Kingdom. What the Commission proposes this time is to decide the winter price at the beginning of the milk year

and not, as was tried before, making the winter price subject to variations in the light of subsequent events or production levels in the summer. That is very necessary.
There is concern amongst dairy producers at the possibility of abolishing the intervention price for skimmed milk, and I know that the Minister is anxious about it. There are many questions to be asked about its proposed replacement by something rejoicing in the extraordinary name "orientation price" and a tender procedure. It is not clear how it will work. It is not clear whether there is any commitment on anyone's part to accept any tender, and it appears to us at the moment to be a vague and uncertain arrangement with the possibility of considerable fluctuations and the consequential undermining of confidence. I hope that we shall hear more about that before the end of the debate.
Then, I deal with the compulsory addition of 2 per cent. skimmed milk powder in animal feed. This is a new surplus disposal device with a number of unattractive features. There is no denying that surpluses are a headache. However, they are not so bad as shortages. The SMP surplus is not of our making. We do not have a surplus. If, therefore, this scheme, or anything like it, were to come into operation, we should have to import it, which does not seem a good idea from the balance of payments point of view or any other.
Then there is the question of cost. The proposal would put up the price of feeding stuffs by 5 per cent. or 6 per cent., or £450 a ton, which would have repercussions all down the line and bear hard on pig and poultry producers. Neither of those sectors has had anything to do with the surplus of milk.
Is it possible for the European Community to bear the cost of this? If so, the addition of skimmed milk powder would not alter the price of feeding stuff per ton, but it would dispose of the surplus and not create many difficulties. It would have another advantage in making the proposal equitable as between those farmers who mix their own feed and those who purchase their feed.
On the non-marketing premium, it is clear that the better structure of the United Kingdom dairy industry makes


the United Kingdom less susceptible to this scheme than our continental neighbours. The surplus of production is across the Channel where there are many more small producers. We are short of milk, despite the fact that we are more efficient producers. There is a strong case—and the Minister supported it tonight—for increasing the United Kingdom's milk output, but I do not think that it can all be done by the medium-size or large herds. The small producer has a very important part to play. In relation to the size of his business and in relation to his land, often, in his own way, he is just as efficient and economical as the larger producers. For this reason I have reservations about a scheme such as this which applies to the land. I know it is a voluntary scheme, but we ought to be very careful before we close any options.
I come next to beef. We have consistently supported the scheme on these lines during transition. I myself put forward in 1974 a scheme not exactly the same but similar in principle and pressed it last winter; and I still support, as do my right hon. and hon. Friends, the right hon. Gentleman in his fight to continue it. His determination to retain this scheme must not lead him rashly and unnecessarily to pay, or to have to pay, an excessive price. He has some strong bargaining counters. We want to achieve a package that is satisfactory all round, not one that achieves a beef premium at the expense of everything else. We must always bear in mind as well the relative position of our meat.
That brings me back to the question of structure. I believe we would like to hear more by way of explanation and justification of such large transfers of funds from the guidance sector to the guarantee sector. We are all agreed in this House about the fundamental importance of agricultural structure, and however tempting it may be to raid this pool, one questions its wisdom. It seems to me to be a case of short-term considerations versus long-term considerations, and both have to be right. It would be far better, both in the long and the short term, to reduce taxation, to restore incentives, to stop threatening the very capital of the agricultural industry by the threat of a wealth tax, than to leave tax at its present level

and try to shore up the situation by short-term palliatives.
The challenge to the right hon. Gentleman, which is in some respects a self-inflicted one, is to restore buoyancy and enthusiasm to the industry of food production. No one supposes that his task will be easy, but our land, worked hard as it is by farmers, growers and farm workers, is one of our greatest national assets. It will still be there long after the North Sea has yielded up all its oil. It is capable of producing more. Those who work on the land are eager to see that it does. A heavy responsibility rests on the right hon. Gentleman. He is to come back in a few weeks to report to the House what he has achieved. The outcome and the results will affect tens of thousands throughout the United Kingdom who produce our food, and every single family as consumers whose interest in supply is certainly no less than in price. He is in the hot seat at the moment and, therefore, we have to rely on him to bring back a fair deal.

8.23 p.m.

Mr. Bryan Gould: The common agricultural policy is so inefficient and wasteful that one searches in vain for any justification for it. There is, however, one fundamental, underlying fact which offers not justification, but perhaps at least explanation. That simple fact is that food prices in general are for the time being, and will be for the foreseeable future, higher within the Community, with its relatively inefficient agriculture, than they are in the world outside, particularly in the cheapest, most efficient food-producing areas. That simple fact was well recognised by those who formulated the CAP. If it was not, one would wonder for what other reason they inflicted upon us all the paraphernalia of the CAP with its import duties, levies, controls, subventions—

Mr. Geraint Howells: rose—

Mr. Gould: —I shall be glad to give way to the hon. Gentleman when I have finished my list—surpluses, possibilities for fraud, all these things that have been inflicted upon us for the simple reason that European farmers, and particularly French farmers, need protection against cheaper food imports from outside the Community.

Mr. Geraint Howells: If I correctly understood the hon. Gentleman, he spoke of cheap food-producing areas in other parts of the world. I wonder whether he could say where those are.

Mr. Gould: I would be very glad to give the hon. Gentleman a formidable list but I will simply point out that in New Zealand one can obtain butter, according to the very documents we are now debating, at prices two or three times lower than Community prices, and similarly with beef and lamb. One could go on. The point that I am making is not denied but is, indeed, confirmed by the documents we are debating. I hope this much at least will be common ground in this debate. If this is a fact, it was to some extent obscured, partly fortuitously and partly deliberately, in the period leading up to the referendum but I hope that we can accept, whatever may be the merits or demerits of the CAP, that it is a simple fact that in general terms food is now and will be cheaper outside the Community than within it.
It is in this context that we must look at this particular exercise in price review. The Commission proposes a general average increase of 7·5 per cent. Inevitably, that does not satisfy the farmers; but the consumer interests have rightly pointed out that that level of increase, which they have condemned, has quite unnecessarily put up food prices. I am a political realist. We have heard all too clearly from my right hon. Friend the Minister tonight how limited is the room for negotiation and manœuvre when he goes to Brussels, so I do not expect him to be able to press for a figure lower than 7·5 per cent., however much his colleagues in the Department of Prices and Consumer Protection might wish he could; and I am delighted to see a Minister from that Department on the Front Bench in this debate.
I hope, however, that when my right hon. Friend goes to Brussels, if he is at all tempted, beyond 7·5 per cent., to compromise in some way at an even higher figure, he will bear in mind that on this occasion at least the Commission is on his side and that our colleagues in the European Assembly have actually persuaded the whole Socialist Group in that Assembly to endorse 7·5 per cent. and to

resist any higher figure, and that that figure itself represents a compromise which stretches to the limits of acceptability the sacrifices which consumers are expected to make on the altar of the CAP.
We in this country have more to fear from the greater disparity between world and Community food prices than anybody else, because we are major importers of food and we have traditionally had very close trading relations with cheap food producers. Therefore, as this disparity widens, not only do we pay more for every individual item of food but the total effect on our food import budget is enormous. It is also worth bearing in mind that we are at this point only part way through a transitional phase which will make this disparity even more punishing and damaging than now appears; and no amount of mumbo-jumbo about securing supplies can possibly obscure the simple fact that for many staple items of the British diet we pay two or three times more than we need pay to our traditional suppliers who are only too willing to provide on a long-term basis.

Mr. John Davies: I take it that the hon. Gentleman would make as a complete exception to what he has said our experiences with our traditional sugar suppliers over the last 18 months.

Mr. Gould: The right hon. Gentleman takes the example of one commodity, but even in that, world prices are now lower than Community prices. One is hard put to find any commodity which is now more expensive outside the Community than within it.

Mr. Frank Hooley: Would my hon. Friend agree that it was precisely because we deliberately destroyed the CSA that we got into the absurd position in which my right hon. Friend had to pay £250 a ton, when the going price is now about £180?

Mr. Gould: I am grateful. It is, of course, true that if we are to say to our traditional long-term suppliers that we are no longer interested, we shall run into short-term difficulties.

Mr. Peart: But would my hon. Friend be fair on sugar? He is wrong here. The deal that we did on sugar was welcomed


by the ACP countries. There was no antagonism from that surce. They recognise that they now have a long-term agreement which is of great value to them.

Mr. Gould: My right hon. Friend is correct to say that our traditional suppliers, once we told them that we are committed to membership of the Community, have had to face the inevitable.
There is a further reason why the common agricultural policy is unsuited to this country, apart from the question of price. That is that one of its major objectives is a uniform agricultural industry. In many senses, in many structural details, our own agriculture is quite different from anything on the Continent. As a result, many of the measures taken in the Community interest to deal with Community structural problems—one thinks of wine, milk, glasshouses, beef, and so it goes on—are wildly inappropriate for British agriculture.
Nowhere does one see this more clearly expressed than in the dairy industry. I pass over the myriad problems which the agricultural policy is posing to producers and consumers alike of dairy products in this country, to say nothing of the difficulties caused to our traditional suppliers, particularly New Zealand, whose dairy farmers are at this moment receiving just over 50 per cent. of the price paid for their products by our consumers. I pass over all these problems and single out perhaps the most bizarre problem of all, which has attracted the attention of both Front Bench speakers.
That is the question of the enormous surplus of skimmed milk powder. My right hon. Friend correctly says that other dairy producing countries have precisely this problem, but no one will suggest that the scale of the problem—1 million tonnes of milk powder—is even remotely approached in other countries—

Mr. Peart: Of course it is.

Mr. Gould: Relatively, perhaps, but certainly not in absolute terms.

Mr. Peart: The skimmed milk stocks held by New Zealand, considering the size of that country and equating it with the whole of the Community, are evidence that my hon. Friend is not thinking realistically.

Mr. Gould: It may be useful in that case for my right hon. Friend to consult his New Zealand colleagues to see whether they have reached a more sensible solution than the one which we are now debating.
What is being suggested here is not only that we should give away 200,000 tonnes—there are varying views on that and some of us may regard it as a good way of dealing with the surplus—but that from the stock of 600,000 tonnes 2 per cent. skimmed milk powder be added to feed-stuffs in other sectors of agriculture so as to reduce that surplus. This is an extraordinary suggestion. Not only is it compulsory, which is objectionable in itself, but it must produce one or two results.
The first is that which was severely criticised by the right hon. Member for Cambridgeshire (Mr. Pym). This skimmed milk powder will inevitably be more expensive than the sources of cheap protein which are normally used. That will mean that the poultry farmer will either be compelled to pay more for his feedstuffs from the Community itself, or the Community must subsidise it in some way. I think that the right hon. Gentleman suggested that that would be a painless solution, but in its own document the Commission suggests that this might require a subsidy of up to 450 million units of account.
Who will provide that money but the very consumer who is also losing out on other aspects of the CAP as it affects the dairy industry?

Mr. Marten: Is not the hon. Gentleman saying that in this effort to dispose of its surplus the Commission is passing on the entire cost of the surplus to the consumers?

Mr. Gould: The hon. Gentleman is right.
In our own case it is more remarkable than that, As has been said, we have had no part in producing this surplus. Our own dairy industry is rightly calling for expansionary measures. Such a policy is endorsed by my right hon. Friend in his own White Paper. So we are being asked to bear this burden for which we have no responsibility, when we are ourselves trying to expand dairy production. I know that my right hon.


Friend's freedom for manoeuvre is limited in Brussels, as we all foresaw, but I hope that he will resist on this issue to the bitter end.

Mr. Spearing: When my right hon. Friend the Minister opened the debate he implied that there was a new feature. My hon. Friend has implied that the subsidies would be a new and extra cost. But the document makes clear that 72 per cent. of the dried milk sold last year was sold at a reduced price as a result of substantial subsidies for the manufacture of animal feedstuffs. Are we now to pay even more?

Mr. Gould: I am grateful to my hon. Friend for the further elaboration of the point I was making.
I shall make a brief mention of sheep meat, because the Commission has proposed a sheep meat regime and we wonder why. This country dominates in both consumption and production of sheep meat. It is mentioned in the second document—the survey of the CAP.

Mr.: There is no proposal.

Mr. Gould: There is a proposal, but it is referred to only obliquely. The proposal clearly stems from the fact that the French are concerned at the possibility of cheap imports of sheep meat threatening their domestic meat situation. The European Court of Justice recently decided that the controls which the French imposed on imports of Irish and British lamb were illegal and could not be continued. We need, therefore, look no further for the reason for this sudden interest in sheep meat and the sudden proposals for a sheep meat regime.
The price which the French propose to exact from us for allowing free access to their markets is that in addition to the duty already paid on lamb, which is currently running at 16 per cent. and is to rise to 20 per cent. next year there should be the possibility of imposing extraordinary controls if there are to use the rather quaint expression—disturbances in the market. Presumably what is meant by that expression is the possibility that French or British housewives should be able to buy lamb at a

price reasonable for them and for the producers.
We should resist the French proposals. They would sound the death knell for the New Zealand lamb industry and mean, according to the Consumers Association, an increase of 50 per cent. in the price of lamb in this country to the consumer. The price of lamb would be put up beyond that of beef and take lamb off the plates of the British consumer.
I hope that my right hon. Friend will accept that it is important to fight for matters such as the continuation of the beef premium. I hope that he also accepts that the CAP is a hydra-headed monster and that, while he should fight what is already there, he should also resist growths like a sheep meat regime, which would be equally damaging.

8.39 p.m.

Mr. John Davies: I agree with the hon. Member for Southampton, Test (Mr. Gould) in a certain amount of what he has said, although I think his basic approach to the CAP is erroneous.
I thank the Minister for his comments about the Scrutiny Committee and I am also grateful to my right hon. Friend the Member for Cambridgeshire (Mr. Pym) for what he said about the Committee.
The debate enables me to return to something about which I feel deeply. It affects the broader spectrum of Community affairs, although it is illustrated most effectively within the framework of the CAP. It is that the Community, to paraphrase a very good Conservative remark, is either a Community for all its people or it is nothing at all.
One of the things which worry me still about the Community's actions in certain sectors, notably in action in the Commission in relation to agricultural matters, is that its quite correct regard for the unity of the market, or the endeavour to achieve unity of the market in agricultural products, leads it to assume that there is that unity existing already, and that it can, therefore, deal dispassionately with the whole Community as though it were but one single market. This leads inside the Community to what seems to me to be slightly damaging proposals which require the British Minister to go forward as though he were begging


amendments or as though he were constantly in some measure of hostility to the Commission. I find this a troublesome factor in the relationship between any Government and the Commission.
I am well known as an ardent believer in the future of the Community and in the development of the unity of the market. I am, for instance, a deep believer in the development of a system of economic and monetary union as soon as it can be achieved. But never for a moment would I imagine that it was possible to embrace the proposition of monetary union and disregard that of economic union. They are essentially hand in hand. In the same way, it is not really practicable in agricultural affairs to assume the unity of the market in terms of its pricing and guarantee function and, in relation to the structure of the market and its nature, to disregard the fact that it is by far not unified. This is an important problem with the proposals that the Commission has put up.
I can illustrate it well in relation specifically to the issues about which the hon. hon. Member for Southampton, Test has been speaking. It is to me clear that, in relation to skimmed milk, the Community's proposals take regard of eight-ninths of the market but not of the remaining one-ninth. That seems to me to be wrong. It seems to me to be quite wrong that the Community should seek to work on a unified basis to correct what is undoubtedly, at the moment, an extremely unsatisfactory characteristic of the Community and the milk market, and visit upon the one-ninth, which is totally dissimilar to the other eight-ninths, exactly the same provisions. That does not seem to me to be reasonable.
It is noticeable in the changes in the intervention arrangements. I have always been a supporter of the principle of intervention, because it has enormous value to the farmer in that it ensures that in all circumstances there is a market. The value to a farmer of being sure that he does have art outlet for his products is of very great importance, as I know.
But I think that it is equally true to say that the change that is now envisaged is a right correction, in the sense that one thing which has been noticeable in the continental dairy market for some considerable time is that a substantial

number of milk producers, by virtue of the fact that their own milk outlets are not at all comparable with our own, have worked consistently to assess at what marginal cost they can produce milk in the certainty that it will go into intervention. This is, in itself mischievous in that, because there is an underlying scheme which assures the farmer that he will not find himself in misfortune, there should be widespreadly those who regard it, on the contrary, as being in some ways a kind of soft touch in the Community.
I therefore welcome the arrangement that the Commission has put forward to overcome this abuse. But I point out that it is totally unsuitable from the point of view of the British dairy market, and, therefore, to provide it blandly as though our market were entirely with the continental one in this respect is not carrying out the task for which the Commission is there, and does not take into account fully all the members of the EEC in seeking to ensure that its proposals are those which meet the overall needs of the market, including our own.
I feel that the same objection has to be made in relation to the methods of disposal of existing stocks. It is all very well to accept 200,000 tons of skimmed milk to be put into the aid programme. I welcome that. I do not find it disagreeable. But this 200,000 tons of skimmed milk has come from no part of our market and has no expectation at any future date of doing so. It is hard that it should be automatically assumed that we must bear the financial consequences of that. The same is true in relation to the 600,000 tons which is going into feeds, because it seems that that quantity does not arise from our market and is never likely to do so. It may well be that a substantial part of our proportion of that load will have to be met by imports from the very market which has produced in excess, in circumstances in which the producers are simply taking advantage of the intervention system and are not regarding it as the basic assurance system which they should.
For these reasons, therefore, I return to my original theme. It is not that I feel expert or competent enough to discuss the question of skimmed milk in great depth, but a Commission which fulfils its task properly should not put British Ministers in the position where


their sole course is to combat what is put before them because it is wholly inapplicable to our arrangements.
This is a very serious concern about the Commission's work. My right hon. Friend the Member for Cambridgeshire and others pointed out that at the end of 1975 there was a major transfer of funds from the guidance to the guarantee system. In fact, 59 million units of account have been transferred in order to meet an unexpected but serious deficit in the guarantee section of the fund. I should point out to the hon. Member for Test that this was to a very large degree in order to pay for our sugar subsidies. However, if it is possible to find such a large amount from the guidance section of the fund in order to meet such a problem, it might well be appropriate for that section to be devoted more effectively to matters which are concerned with the structural side of the industry. In particular, it should take into account the differences between a country like ours which is still the biggest food importer in the world, and the eight countries on the Continent which are, if not balanced, then surplus producers.
The Community has rightly produced a regional policy in order to try to develop a better economic balance in industrial terms within the EEC. It provides funds to ensure greater equilibrium. In the same sense, the Guidance Fund should not be ignored as a means of trying to cure the basic imbalance between this country as a vast food importer and the other members which are surplus producers, so that these things could be put on to a more rational basis.
I believe that the Minister's wish is to hear the views of hon. Members and to try to strengthen him, if he needs strengthening, by knowing what we feel. Here, he has the views of an ardent pro-Market man but one who is not completely happy with the comportment of the Commission in this respect as it affects British interests.

8.49 p.m.

Miss Betty Boothroyd: As a Member of this House and of the European Parliament I am conscious of continually being educated in all sorts of agricultural matters, and I, no doubt, still have a long way to go.

I have no pretensions about being an agricultural expert, of knowing my way around the CAP, or of knowing about the technicalities of the price review. I do know, however, that farmers and farm workers make up a certain percentage of the 250 million or so people in the Community, as do postmen and plumbers. And I approach the whole problem of farm prices as a small particle of that enormous force which makes up 100 per cent. of the Community—the consumer. The consumer always foots the bill.
I wish to comment on this year's farm price proposals from the point of view of the consumer and the impact the proposals will have on shop prices. The proposal is to increase farm prices by 7·5 per cent. I believe that should be the maximum, and I hope my right hon. Friend's hand will be strengthened by this debate and the decision taken in the European Parliament. Even so, I suspect that the proposed price increases will mean higher prices for the British consumer because of transitional and monetary arrangements and because the Commission's figures are based on the assumption that only about 70 per cent. of foods are affected by the price review. In fact, a great deal of food which is not included in the review is indirectly affected.
The Secretary of State and other hon. Member have mentioned methods of reducing the milk powder surplus. One suggestion has been that something like 2 per cent. should be put into animal feeding stuffs. This will surely lead to increases in the price of feeding stuffs of perhaps more than £4 per ton and will result on large price increases especially for poultry and pigmeat. The consequences will go wider still with an effect on all kinds of animal products which in turn will have an effect on prices to the consumer. It will eventually mean the British consumer being penalised for over-production. That is why I am emphatic that there should be no increase above the proposed 7·5 per cent.

Mr. Marten: If the Socialist Party from this Parliament agrees to the 7·5 per cent., does the hon. Lady know whether the other Socialist parties in the European Assembly will support it? How does their view compare with that of the non-Socialist groups?

Miss Boothroyd: I understand that the decision of the Socialist group in the European Parliament is to accept the 7·5 per cent. I have not been in the Parliament this week. Perhaps hon. Members who have just returned will be able to answer the hon. Gentleman's point.
As a consumer, I want enough food to eat and I want to be assured of its supply. Naturally, as a woman, I want it to be provided as cheaply as possible, but not so cheaply that those who earn their living on the land do not get a fair return for a fair day's work.
This having been said, a few questions remain. Is the consumer getting value for money from the agricultural policy, and is the policy fulfilling its declared objectives of increasing productivity, promoting technical progress, ensuring a fair standard of living for farmers and farm workers, stabilising markets and ensuring an adequate supply for the consumer at reasonable prices? I believe the answer is a qualified "No". I qualify the answer because there have certainly not been failures as total as some would like to believe. There has been a shift in agricultural policy from that which had as its prime objective the protection of the producer to a policy which takes a more balanced view of the interests of producers and consumers alike. However, in the short term, the consumer is not getting a very good bargain.
I wish to make observations on the longer term and the working of the system which produces these prices. First, Community producers cannot go on believing that they can produce as much as they like of any given commodity regardless of world prices and consumer needs. Nor should they believe that the price the consumer eventually has to pay is of no account. The building up of surpluses is a considerable indication of the extent to which support resources have been misallocated and where there has been little, if any, forward planning.
If we are to solve the problem of costly surpluses it must be tackled at source. Difficult though that is, it must be done by reducing the incentives to produce what is not required. Surely at this stage of our association with the common agricultural policy we should be on the way to defining more precisely a modern viable farm, and seeking to set prices at a level which reflects the needs

of a modern, efficient unit, taking into account world prices.

Mr. Spearing: Is my hon. Friend aware that a problem—mentioned some years ago—is that the variation in the nature and background of farms in Europe makes it impossible for a small farmer in a backward area to get a reasonable return without the more efficient farmer getting an enormous return? That is a dilemma which no policy can meet.

Miss Boothroyd: Yes. I am aware of that. Improvements will not happen overnight.
Many small farmers on the Continent have already been phased out. It takes a political decision to see that producers who cannot make a living move out of the industry, or that the industry is restructured into larger groupings. All people, in whatever job, are reluctant to change. Hardships arise, and individuals must be cushioned against those hardships. This is a social, not an agricultural, problem. A social element is also involved when production which is fundamental to our well-being has to be supported and when there are justifiable social and regional reasons for keeping non-viable producers still producing. Then the cost of support must be met through general taxation and various regional and social funds.
What is wrong with the present system is that the support cost is being added to the consumer's food bill. The poorer the family, the less it is able to carry that type of taxation. That is what is wrong. It is that hidden analysis of the price the consumer has to pay that has been neglected in arriving at farm prices for food.

Mr. Hooley: Does my hon. Friend realise, in addition, that while we have an intervention system such as we have at present there is no incentive to producers to adapt, because, by definition, anything they produce will be bought?

Miss Boothroyd: I do not accept that. Conversely, the consumer has a responsibility too. I do not accept the argument put forward by some of my hon. Friends. We can no longer look to other countries to supply us with cheap food whenever the domestic production falls or domestic prices rise. I want to be assured of


adequate supplies at all times, good harvests or bad, world shortages or world surpluses. Levels of agricultural production must cater for that, and we must also cater for over-production, and this, too, must be paid for, but over-production must take the form of manageable molehills rather than immovable mountains. I look upon manageable surpluses as an insurance policy. No householder complains if, having insured his house against fire, it does not burn down. Similarly, no one can complain about a system which ensures against shortages, and ensures that there is food in the store cupboard during hard times.
As I see it, the major task is to work out forecasts of consumer needs for major products, not annually or in the short term, but over the long term—over perhaps a five-year period. The needs of the consumer must be balanced alongside the ability of the producers to produce what can be produced within our society. Naturally it would be only prudent to plan for surpluses so as to ensure supplies. A five-year plan, which is modified perhaps each year in terms of needs and world conditions, is basic to agricultural policy. It is a difficult task, and I am always told that it is dangerous, that we must proceed with caution, and that forecasting is impossible. Of course, it is difficult. However, it has to be done, as it is already done with some commodities.
It is only when we have this type of long-term planning that the farming community will receive a substantial degree of stability. I pay tribute to the British farming industry. It is highly efficient. It is only with long-term planning that the consumer will receive protection against excessive surpluses and inefficient production.
Finally, so far in decision making the consumer's voice has been very weak. It is only after decisions are taken in Brussels that consumers are consulted. Consumers are no longer concerned only about hygiene, quality and labelling. They are also interested in food costs and prices, the cost of production, the cost of storage, and in how surpluses are disposed of. I ask my right hon. Friend the Minister for Agriculture, Fisheries and Food to ensure that the consumer's voice is heard in the early stages of decision making, particularly when those

decisions fundamentally involve the consumer.

9.02 p.m.

Mr. Geraint Howells: Although we take note tonight of the EEC documents, I am grateful to you, Mr. Deputy Speaker, for accepting our amendment to the motion in the name of my colleagues and myself.

Mr. Deputy Speaker (Sir Myer Galpern): Order. The hon. Gentleman is under some misapprehension. We are allowing the amendment to be debated together with the Opposition amendment, but no one has accepted it. The Secretary of State accepted the Opposition amendment but not the Liberal amendment.

Mr. Howells: Thank you, Mr. Deputy Speaker. I misunderstood Mr. Speaker's remark at the beginning of the debate. However, we can discuss the Liberal amendment to the motion.
First, I congratulate the Minister on clarifying the EEC documents. I confess that he is gradually getting to grips with the situation within the European Community. Tonight we are reviewing the agricultural situation within the EEC. We are reviewing not only what is written in the documents but also what is left out, which should be included. We should be planning ahead. I have not read all the documents but I have read many of them and I still hold the view that I have held for many years, that many changes must be made in the framework of the common agricultural policy within the next 10 years if farmers are to accept the challenge to increase food production in this country.
We need a 10-year plan for the agricultural industry so that farmers can plan ahead, know exactly where they are going and, in turn, can invest their capital accordingly. Many of my colleagues are well aware that in Wales in particular the majority of farmers are confined to dairy farming or livestock rearing of cattle and sheep because of climatic conditions. One thing is certain. Farmers will not expand unless they are adequately recompensed for their costs, and unless we have a favourable review this year, production will decrease. We are all waiting for the annual price review to be disclosed for this year. In my view the annual price review should


be made known at the end of every year, so that farmers can plan ahead better.
I am sure that the Minister is very well aware of the figures released a few weeks ago by the Meat and Livestock Commission, which estimates that lamb production will be down this year by 7 per cent. and beef production will be down by 17 per cent. This downward trend must be stopped at all costs, otherwise the nation will be heading for disaster. We are already spending too much money on food imports. Production in many parts of the country could be increased by up to 100 per cent., given the right incentives and encouragement.
I reaffirm on behalf of my Liberal colleagues our total support for the Minister in rejecting the EEC proposals to phase out the beef regime introduced by the Government in 1974. It is working satisfactorily—as long as the price guaranteed is increased year by year according to the increased costs of production. I am sure that as a practical farmer I am voicing the opinion of nearly all livestock producers in Britain when I say that the present scheme must be retained at all costs.
I hope that one day the Minister and his colleagues will be able to persuade his counterparts in Europe to accept our method of support, which safeguards the interests of our producers and consumers alike. We had operated the old system very well for many years, but we all know what happened in 1974 when the guaranteed price system was done away with. Confidence was lost overnight. Many farmers are still finding it difficult to overcome the financial difficulties that came upon them in that year, that is now history, but it must not be allowed to happen again. What happened in 1974 spelled disaster for the livestock sector of the agriculture industry.
Turning to the hills and the marginal land of Britain. I agree entirely with the brief of the NFU. The proposal to increase the FEOGA contribution from 25 per cent. to 40 per cent. for the payment of hill subsidies under the provisions of the directive on mountain and hill farming and farming in certain less favoured areas, is to be welcomed. I am sure that the Minister knows my views quite well. Although I accept the present system, it was a sad day for me when I learned

that 500 small hill farmers in Wales would not qualify under the new scheme and that many more throughout Britain would not qualify. Once the Government have accepted this order in principle—I know that it was only 3 hectares, or 7·14 acres—I hope that the 3 hectares will not be raised to 20 or 50 hectares in the years to come, otherwise many hill farmers and marginal farmers will be thrown out of business.
I want to make a suggestion to the Minister. If we are to increase production from the hills we must maintain our support system. Perhaps many right hon. and hon. Members will not accept my suggestion, but I suggest that to increase production we plant one acre in 10 of all the land in the less favoured areas, or 10 acres in every 100 or 100 in every 1,000. I believe that it would be a worthwhile exercise, and I hope that the Minister will pursue that suggestion.
I am sure that the Minister is aware that there is another aspect that worries me in relation to increasing production. We must all confess that the ground is honest. It is much more honest than we are. I am sure that the Minister is aware that because of lack of confidence in 1974–75. British farmers did not feel able to plough back into the land from their profits. In the past few years the tonnage of basic slag put down has dropped by two-thirds compared to 1971–72. There has also been a reduction in the amount of lime that has been spread throughout Britain during the past few years. If we do not feed the land, the land will not feed us.

Mr. James Kilfedder: That is common sense.

Mr. Howells: I am grateful that at least one hon. Member agrees with my views.
I hope that the Government will not accept sheepmeat regulations that do away with the guaranteed price system now operating. I have tabled an Early-Day Motion urging the Government to retain the system. I am grateful to right hon. and hon. Members from both sides of the House for signing the motion.

Mr. Marten: Not at all.

Mr. Howells: I am afraid that one day we shall have to accept sheepmeat regulations, but I hope that the Minister, in accepting them, will retain a guaranteed price system for lamb.
As a member of the Standing Committee on the Agriculture (Miscellaneous Provisions) Bill, I am grateful to the Minister for accepting my suggestion that we have a land bank to help young farmers entering the industry. The right hon. Gentleman has agreed to consider the matter, and to do so in a European context. I hope that he will be successful in his deliberations. I know from experience that many genuine young farmers and farm workers would like to farm 20, 50 or 100 acres, but due to a lack of capital they are unable to be small farmers and eventually large farmers. I am grateful to the Minister for saying that he will consider my proposals within a European context.
The Minister said that many adjustments were made to the green pound last year, but the day is coming when we shall have to do away with it. I am wondering whether the Minister is in a position tonight to give us an assurance that he will do everything in his power to abolish it. It has been in existence for far too long. That view is shared not only by many farmers but by whole farming organisations. The disparity in value is the cause of great concern. I hope that the Minister will be able to answer the few points that I have raised.

9.14 p.m.

Mr. John Watkinson: I was pleased to hear the hon. Member for Cardigan (Mr. Geraint Howells) speak of the necessity and desirability of creating a land bank. That is an idea which will find fruitful ground among my hon. Friends. I support the idea that farmers might be able to pay their CTT by handing over land to the State so that we can create a land bank, but that is another matter.
I can understand the frustrations that are felt by Ministers when they feel that in debates such as this we are returning to the old debates about whether Britain should join the Common Market. They feel that we are bringing alive once more the arguments against the common agricultural policy. Ministers cannot complain, because the CAP is a hydra-headed monster and there are many grounds for criticism. I serve as a member of the Public Accounts Committee, and we have considered the nightmare of monetary compensation amounts as well as problems

involved in smuggling between Ireland and this country. It is such a tangle that it is almost beyond human understanding.
The right hon. Member for Knutsford (Mr. Davies) let the cat out of the bag when he said he looked forward to economic and monetary union because he felt that only in that way would the CAP function. I agree that it would function more easily if there were such a union, but I warn the House about the consequences of the proposal. If the right hon. Gentleman were here, he might wish to consider some of the arguments put forward by SNP Members in terms of the effect of any monetary union between their country and ours. He might consider the effects of such a union between the United Kingdom and the rest of Europe.
In debating the common agricultural policy, it is worth remembering that world commodity prices have evened out. In the great referendum debate the case for entry was given impetus by the fact that there was said to be a marked increase in world commodity prices and that our entry into the EEC would enable us to obtain a secure and stable market. We are now in the EEC, but it must be remembered that world prices do not always remain high, and, indeed, have fallen. Therefore, had we still been outside the Common Market we would have had access to cheaper foodstuffs.
I am worried about the fundamental philosophy underlying the CAP, particularly the intervention price system which envisages production only in terms of the end price. The net result of such a system can only be surplus production. A German economist who has studied this matter has suggested that food consumption in the Common Market is increasing at about 2 per cent. per annum, whereas food production is increasing at a rate of 2·9 per cent. per annum. Therefore, by 1980 there could be 10 per cent. over-production unless we do something about the situation.
I have criticised the Common Market, but we have recently debated the stocktaking documents and there are one or two facets of negotiation that meet with my approval. These facets are now written into the whole basis of the common agricultural policy. Whether we


are for it or against it, we have to live with it for the next few years.

Mr. J. Enoch Powell: indicated dissent.

Mr. Watkinson: I do not anticipate our coming out of the Common Market as rapidly as the right hon. Member for Down, South (Mr. Powell) expects. We have to live with the CAP, but at least we have established that the test whereby farmers' incomes are set will be based on the efficient farmer. This is a vital concept, and I am pleased to see it ingrained in the basic thinking of the Common Market. I hope it really is the efficient farmer that we are talking about, because in bygone days it was the inefficient French farmer.
We have also to accept that a new concept has entered into Common Market thinking, in terms of co-responsibility for the production of surpluses. This responsibility is being placed to a limited extent upon those farmers who produce surpluses. They will be penalised in years after. I believe that already in this year cereal farmers, sugar farmers and olive oil producers have been affected in this way.
I emphasise the point that I raised with my right hon. Friend about the problems of milk production, because it is absolutely vital to us in this country. It is in milk production that our comparative advantage lies.
It is very disturbing for me, coming from an agricultural constituency, to see a proposal in the documents suggesting that we shall be paying people to go out of milk production in this country, for milk production is one of our great natural assets. I find that suggestion as repugnant as glasshouse producers in my constituency being paid to smash up their glass.
This brings me to horticulture. I know that the Minister had a big brief and did not have time to mention it, but horticulture is a significant part of our agricultural system in this country. I know from my own constituents that they are very concerned about what the future holds for them.

Mr. Richard Body: Hear, hear.

Mr. Watkinson: I am grateful to the hon. Gentleman for that intervention. These people have been faced with an increase of over 300 per cent. in fuel costs in the last two years. They have also had to face the effects of the cataclysmic gale at the beginning of the winter. They are worried, too, about the lack of any Common Market policy in this matter which we would accept in this country. They complain that, while they are getting no support, their competitors abroad seem to be getting it. They point to Holland in this respect. I hope that my colleagues on the Front Bench will consider this.
I should like to revert to my reference to the complexities of the nightmare world of the CAP in which we now have to live. I have the honour of serving on the Public Accounts Committee, in which we have considered the modernisation of farms. Hard though it is to believe, there are farmers in this country who are entitled to money from the Common Market under the scheme for modernisation but are not taking it up—this is admitted by civil servants in the Ministry of Agriculture—because they simply do not understand the procedures. Yet these are areas of expenditure in which the taxpayers of this country could be helped.
I am no great expert on agriculture, but as a result of my attempt to understand the operation of monetary compensation amounts, and the green pound, I feel that there really is a need for a Select Commitee on agriculture, so that we can be better informed of these matters.
I have had a certain amount of experience in economics, and as a lawyer, but when I try to understand agriculture I find myself literally on the frontiers of human knowledge.
In these circumstances, it might be of some assistance to me and to my colleagues in the House—and, indeed, to the nation at large—if we had a Select Committee on Agriculture. I hope that my right hon. Friend will take this message back to the Leader of the House and give us an answer in due course.

9.25 p.m.

Mr. Charles Morrison: I begin by echoing the words of the hon. Member for Gloucestershire, West (Mr. Watkinson) about the position of the


horticulture industry. There is no doubt that many horticultural producers have suffered considerably from the increase in fuel costs and, more recently, from the very severe gale. The gale was an act of God, but that, coming on top of everything else, has made life very difficult for them. I hope that the Minister will bear their position in mind very sympathetically.
The hon. Member for Gloucestershire, West was also concerned about the possibility of increasing surpluses in production unless, as he said, we did something about it. He was right to be concerned about this matter. However, it has always struck me that one of the fundamental objectives of the common agricultural policy, in addition to its intention to provide an adequate standard of living for people in agriculture and an adequate supply of food, was so to reorganise the structure of agriculture within the Community that it would take account increasingly of consumer requirements, which should have the effect gradually of reducing the possiblity of any vast surpluses of production.
I cannot help thinking that it is rather refreshing to be able to take part in a debate of this kind in the House. It is one of the minor, albeit important, benefits of Community membership. It means that we are able to discuss here the proposal for what now amounts to the annual price review before the decisions on it are made and, in consequence, we have an opportunity to bring some influence to bear upon them. This is a pleasant change compared with the old days, when the Minister of Agriculture made his announcement and we, or more precisely the agricultural industry, had to lump it.
As before, the review provides an opportunity to put the gloss or veneer on the agriculture industry for the forthcoming year. In the old days, this was very important, and it remains just as important. But the veneer is relatively more or less important depending on whether the framework of the industry underneath is healthy.
I have no intention of crying "Wolf", and, in the past, I have criticised some farmers for crying "Wolf" too often. However, I think that the underlying framework of the agriculture industry

today gives some cause for concern, for two reasons above all. First, it seems that there has been a considerable fall-off in capital investment. In the year ending September 1975, there was a 41 per cent. decline in the number of applications for capital grants. That must reflect a considerable decrease in the amount of money which farmers intend to put into the industry. If they invest less, in due course it will become increasingly difficult for them to maintain their rate of production, let alone increase it.
There is no doubt that this cut-back has occurred because we have had two years of very low profits. Other reasons are inflation and the huge increases in costs to which my right hon. Friend the Member for Cambridgeshire (Mr. Pym) referred earlier. These together have reduced confidence very considerably.
The second reason for concern is the extent of taxation, especially capital taxation, as it affects farmers.
If the farmers in my county and in my constituency were asked today what is their main worry in agriculture they would all start by saying that it is the rates of taxation. The National Farmers' Union is extremely concerned about this. That has been shown recently by a leading article in The British Farmer and Stockbreeder, entitled "Taxation is Still our Biggest Enemy". Taxation is the deathwatch beetle which could eat away the framework of agriculture. I was not uninterested to note that this has been recognised by some sectors, at least, of the Labour Party.
I have no intention to argue the question whether or not it is the intention of the Labour Party to endeavour to nationalise agricultural land, or even to incorporate that in its policy, but I read a report in one of our national newspapers of a document that apparently originated in the Labour Party Home Affairs Committee, proposing the nationalisation of land. The newspaper said that, anticipating the objection that the proposals would involve very great public expenditure, the document countered by stating that much of the land taken over would be in lieu of taxation. If one takes that the other way round, to me the implication is that there is an understanding amongst certain members of the Labour Party that the level of


taxation of agriculture today is such that before too long many farmers will be forced to sell up simply because they will not be able to stay in business any longer.

Mr. Watkinson: Would the hon. Gentleman also accept that there is concern among certain Members on the Government Benches over the effect of capital transfer tax on the forestry market, and the fact that there has been a fall of considerable proportions in the planting of trees in this country. This is of great concern to the Government side, and, I hope, to all others in the House.

Mr. Morrison: I am delighted to hear what the hon. Gentleman said. We shall look forward to receiving support from him when we bring forward amendments to capital transfer tax in respect of forestry, and no doubt other matters concerned with agriculture as well. The hon. Member for Gloucestershire, West has made a very encouraging point, but whilst current rates of capital taxation continue there will be little hope of achieving the White Paper targets and, therefore, as my right hon. Friend the Member for Cambridgeshire pointed out to him, the Minister must emphasise the impossibility of ever having a hope of achieving his White Paper targets unless he can persuade his right hon. Friend the Chancellor of the Exchequer to reduce taxation and to show a little more common sense towards agriculture.
I was very interested in the argument put forward by the hon. Lady the Member for West Bromwich, West (Miss Boothroyd), who seemed to me to try to steer a reasonable path between the interests of the producer and the consumer, but I doubt very much whether an average increase of 7·5 per cent. in prices will be adequate to encourage farmers to increase their production, as again the Minister apparently hopes, according to his White Paper.
Any agricultural policy should be broadly designed to produce a small surplus. It is virtually impossible, with all the uncertainties of the weather and so on, to produce precisely what is required. It is therefore necessary to have a marginal surplus rather than a marginal shortage, with the consequent increase in prices. It is essential to keep any surpluses in perspective. Despite emotive

talk about "mountains", they come and go; they disappear as a result of later shortages or of policy decisions, in this case by the Commission.
I am not satisfied that the methods so far adopted to cope with surpluses are perfect. That would be true if the proposals for dealing with the current skimmed milk powder surplus were introduced. I hope that the Minister will succeed in his representations on that subject.
I support the Minister's efforts to retain the beef premium. It is encouraging to know that he has learned from his mistakes in 1974, when he burned his fingers badly. I hope that this time he will achieve success in his continuing negotiations.
We should remember that the incompetence of the Russian agriculture system governs the world-wide availability and cost of wheat. It is important to do nothing to endanger Common Market production. I support my right hon. Friend's request for postponement of the two-tier pricing structure.
I gained the impression, this year, of uncertainty in the Commission's proposals for price changes, but I hope that it is just that it wanted to hear the reactions of the various countries before drawing firm conclusions. In that respect, I hope that this debate will help both the Minister and the Commission.

9.39 p.m.

Mr. William Ross: As usual in an agricultural debate I want to say a brief word about the green pound. The briefest and best word that I can say about it, especially in relation to Northern Ireland, is that the sooner it is brought to parity the better for all concerned. With that, I will leave the subject for tonight and move on to beef.
All of us and the farmers welcome the statement that the Minister intends to defend the premium system which has been negotiated. It is entirely welcomed in Northern Ireland in view of the special circumstances in which it operates there and of the special need there. But what is meant in the Explanatory Memorandum on beef and veal by the reference to
…slaughter premiums on adult cattle and (as alternatives) the payment of cow retention on calf subsidies "?


If alternatives are to be discussed, we should know precisely what they are and why, if the right hon. Gentleman intends to defend premiums to the death, he finds it necessary to talk about alternatives in the Explanatory Memorandum.
One of the main problems in relation to less favoured areas is Italy. What does paragraph 3 of the Explanatory Memorandum mean? Does it mean that the Government can increase payment beyond the present level, or can they change the areas covered by the less-favoured areas directive? If it does not mean that, where is the extra 15 per cent. of money to go? Is it to go into things like the meat industry employment scheme in Northern Ireland or in the form of grants to farmers to improve their capital works? Or is it, as I suspect, to go to the Chancellor of the Exchequer? The farming community and the taxpayers would resent that. If money is coming from the Common Market for farming, the agricultural industry should get it. We should be told where in the industry this extra money is to be spent.
I turn now to the pig and poultry industry in Northern Ireland, which imports about 80 per cent. of its feeding stuffs. We have high costs there. They are always higher than those in the rest of the United Kingdom. If to those higher costs we have to add 6 per cent. in the form of a skimmed milk powder addition, how does the Minister expect the egg and pig producers of Northern Ireland to survive? Is it intended that Northern Ireland egg production should be allowed to run down to the point where it will only meet the internal needs of Northern Ireland? What effect will the skimmed milk powder scheme's introduction have on egg production and the finances of egg producers in Northern Ireland? I see no reason for confidence that egg or pig production in Northern Ireland can continue on any reasonable scale. I say that mainly because of the high cost of transport and because the Community has made it clear that each area will produce that which it is most suited to produce. If that is so, the logical places to produce eggs and pigs are France, Germany and the East Coast of England, and not Northern Ireland.
How long will the United Kingdom's guarantee system for milk last? What effect will the proposals for standardisation

have on the guarantee system if they are applied here? Like the beef regime, this is of vital importance to the farming community in this country, and it should have a clear and definitive answer. In the end, all it really means is that all that has been done by the Minister and his colleagues in Brussels is to make this nothing more than a hole-plugging exercise, because there are vastly different circumstances in production in United Kingdom and continental agriculture.
Our old guarantee system was very useful in its day, but it came into existence and operated in entirely different circumstances. It operated simply to defend a cheap food supply for the nation, and for no other reason. That system could operate successfully in the circumstances which then existed.
The NFU and all the farmers' unions complain of a lack of overall strategy and a lack of continuity in farm planning. What on earth do the farmers' unions expect? They are trying to reconcile points of view which are so vastly different that they can never meet. However, the situation is becoming more clearly understood by the farming community, and I think that the farmers are altering their opinions about where they now are. They complain of ad hoc measures which in Northern Ireland we call hand-to-mouth measures. They are nothing else, and cannot be in present circumstances.
I now turn to the system under which our old guarantee system for agriculture worked. It operated in circumstances where, because of our population, we were permanently in a food deficit situation. It could be used in these circumstances to even out the hills and level off the tops, such tops as were left after the tax system operated. Now we have to operate with a permanent surplus of all commodities.
We must be clear about that. If, as we all hope, agriculture on the rest of the Continent becomes as efficient as it is in this country, there will soon be a permanent surplus. What are we to do? Are we to use it as a political weapon, or sell it on the world's markets at high cost to ourselves? I should like to know what the leaders of both parties intend to do when that situation arises, be it a happy or an unhappy situation, according to


one's point of view. While the present system exists there are bound to be mistakes. They are as inevitable as the food mountains that will result from them. We must be told how we and the Common Market intend to deal with it in a reasonable and economic way.
Farmers' unions are now face to face with the realities of membership of the Common Market. The Minister has done his best, but it is clear that it is only a plugging operation. The effect on small farms in outlying areas of the United Kingdom is simple: they will disappear. There is no way round that, and farmers must be told that this is so. The small farms depend on pigs and poultry. The Minister has said tonight that he can only support efficient farms, but they can only be efficient when they have top quality stock and when they can buy feeding stuffs at reasonable prices. That is impossible at present.

Mr. Peter Mills: I have listened carefully to the hon. Member's argument. Does he really think that in this country we should always produce food as cheaply as possible to the detriment of many Third World countries which produce protein and other things? That is not what I want.

Mr. Ross: The United States, Canada, New Zealand and Australia would all be happy to sell us food.

Mr. Peter Mills: At low cost of production?

Mr. Ross: They were happy to sell to us before.
The Minister also explained that milk producers with 30 cows at most would be taken out of business. Where I come from, as in many other parts of the country, 30 cows is a respectable herd, and it represents a considerable investment in time, skill, capital and hard work. There are many such producers in my constituency. Is the House to support or bring forward legislation that will force out the small family farm? Are we eventually to work round to a system of vast co-operatives and farming communes? I would deplore and oppose that, and I think that the farming community would do the same.
It is high time that the Government, the House and the Common Market came clean about what the farming and food policy will be. The hon. Member for Southampton, Test (Mr. Gould) said that there was cheap food to be had elsewhere. There was recently a grassland conference in Northern Ireland at which one of the speakers alleged that it was possible by varying systems to produce beef at £6 per cwt. or £85 per cwt. This view was put forward by a member of the Grassland Society of Northern Ireland. Its opinions are not to be taken lightly. In Northern Ireland we have some of the foremost grassland beef producers in the world. I am prepared to believe the figures they put forward and I am also prepared to believe that they can produce beef according to those figures.

Mr. Peter Mills: Rubbish.

Mr. Ross: If the hon. Member does not agree with that let him write to the society, which will give him the facts so that he can read them for himself.
The Common Market and the House must decide whether we are to have cheap food or dear food. In other words, are we to have subsidised production or is the consumer to pay the real price? The percentage of family income spent on food has been falling, but are we not heading for the situation where it must increase? That is the question that the two major parties and the Common Market must answer. The present system is unworkable and will soon be demonstrated to be so.

9.53 p.m.

Mr. Nigel Spearing: We have heard a powerful speech from the hon. Member for Londonderry (Mr. Ross) which has highlighted some of the anomalies and paradoxes of the common agricultural policy. I agreed with nearly everything that he said, with this reservation. He said that the previous system under the 1947 Act was designed for one purpose only, to enable us to import cheap food. I think he will agree that it had another purpose. That was to give a stable minimum price to the farmer, who, knowing that he had a guaranteed price, could indulge in good husbandry. I do not think there is much evidence that the CAP does that.
The hon. Member for Cardigan (Mr. Howells) referred to the need to look


after the soil, but, unlike the previous system, the CAP does not encourage that. If anything, it does the reverse. Our former system also encouraged a wholesome rural society, which all parties in this House want. It also encouraged a variety in crops and stock, which in itself led to good husbandry. I do not want to see a pigless Northern Ireland. That would be a great pity.
I did not agree with the intervention of the hon. Member for Devon, West (Mr. Mills) on the subject of cheap food. Those of us who have consistently opposed the common agricultural policy have not necessarily done so on the ground that we should get food from the cheapest markets. The Commonwealth Sugar Agreement did not necessarily mean, over a period of years, that we would get the cheapest sugar. The Conservative Party voted it away when we joined the Common Market. Many of us would like an arrangement of that sort now, but I will return to the question of sugar later in my speech.
This is a very important series of documents, but when the business of the House was announced last week, the Leader of the House did not tell us what they were about. We are about the annual general meeting of the CAP in Britain. All my right hon. Friend said was that we were to discuss EEC agriculture documents. He did not say that they were the annual price review and survey for 1975. It was only on Monday that hon. Members were able to obtain copies of the documents from the Vote Office.
The form of the documents is very bad—a wad of paper six inches thick. In view of the importance of the policy, we should have had at least some of these papers, I do not say all, printed in English. A very great sum of money is involved. I doubt whether very many members of the public will have access to these documents, and the quality of the debate in this Chamber and in the country, and, therefore, the quality of democracy, is the loser if this information is not more easily available.
The table on page 18 of the main document, No. 321/75, gives credence to the suggestion that food is more expensive within the Common Market. Taking world prices as 100, wheat durum inside

the Community is 125, beef and veal are 168, eggs 164, butter 320 and milk powder 140. These are all averages for 1974–75. I suspect they will be even higher next year.
Sugar has been a subject of controversy. It was the delay in banking the so-called bankable assurances which led to the shortfall of sugar imports and the subsequent shortage to the consumers last year. The right hon. and learned Member for Hexham (Mr. Rippon) got his bankable assurances, but they consistently bounced until the eleventh hour—just before we went into the Common Market The ACP suppliers were not assured of their market, and it is not surprising that we had problems in the change-over between that system and the new system.
We are now reaching the second stage of these problems with the publication by Tate and Lyle and Manbré and Garton of the rationalisation problems facing the British cane sugar refining industry. Many people have known these problems were coming for some time. The capacity of the British sugar refiners is over 2 million tons of sugar a year in white sugar equivalents. Because of our entry into the Common Market, we shall have a maximum of 1·4 million tons to refine, leaving a surplus of about half a million tons of capacity per year. That means that there will have to be redundancies. It is not so simple as pro rata redundancies in the six main sugar refineries in the country. Specialities are involved. Each refinery looks after a certain part of the sugar demand and some refineries deal with sugar wholesalers. The matter is extremely complex. The Government have announced their intention to encourage the increased production of beet sugar. That suits the farmers. No doubt most Opposition Members will say "Hear, hear" to that policy, which has been consistently asked for, but it produces many problems.
First, there is the supply problem. This year we have only about 600,000 tons of beet sugar, and the crop in the previous year was low. According to my information, the variation in the yield of sugar can be 30 per cent. up or down. That means that our only sources of sugar are unreliable. The movement in our beet sugar supplies is the same as it is in Europe, especially in Northern France which has a similar climate. So we have


an imbalance of shortage and surplus with the European sources as well.
The Government have given permission for the British Sugar Corporation to put what are called white ends—that is, extra refining capacity—on the sugar beet refiners at Peterborough and Ely. Those beet raws used to come to the port refiners, who will be further reduced at a time when their cane sugar imports are going down. This means a loss to the cane refiners of about 1,500 to 2,000 jobs out of a total of between 5,800 and 6,000 in the industry as a whole.
Those jobs will probably be lost in the next year or 18 months, and they will be lost in Greenock, Liverpool and East London, all places where jobs are not easy to find. The cane refiners have not decided among themselves how these redundancies are to be achieved. Today they published three options, and there will be disagreement as to which option should be chosen. The unions have got together and said that the issue is not between them, but that their quarrel is with the Government for asking the cane refiners to do this on their own. The cane refiners have not been able to do it and the Government have been asked to referee. The Government must take the odium of the choice.

The Minister of State for Agriculture, Fisheries and Food (Mr. E. S. Bishop): I draw my hon. Friend's attention to the Parliamentary Question tabled yesterday by my hon. Friend the Member for Greenock and Port Glasgow (Dr. Mabon), to which my right hon. Friend gave an assurance that there will be continuing consultation with the unions and the refining interests on possible reorganisation. The first task is to elucidate the documents which are under discussion. Then there will have to be an assessment before the policy-making is completed. I want to use this brief opportunity to assure my hon. Friends and the industry—both employers and employees—that there is a long way to go before plans are finalised. The documents to which my hon. Friend the Member for Newham, South (Mr. Spearing) refers are purely discussion documents, and we should not read too much into them. There will be considerable consultation with all interests before a decision is reached.

Mr. Spearing: I am grateful to my hon. Friend. I have read the answer in Hansard. What my hon. Friend said does not change the fact that the onus is on the Government to decide. I am heartened by what he said about discussions, because the companies have accepted certain assumptions which the employees and I do not accept. I declare an interest in having the Silvertown refinery of Tate and Lyle in my constituency.
The first assumption is: why put the extra white ends in the beet refineries at Peterborough and Ely? Farmers can produce more beet if they like. We should prefer that they did not. However, why should the country spend extra money on putting white ends in those refineries where the refining capacity already exists and which will have to shed their capacity and put people out of work? That does not make sense from any point of view. Yet both the sugar companies and the Government have apparently accepted the proposals for adding to these sugar refineries.
The second assumption is that there will be no possibility of bringing in beet from the Continent. At the moment the price situation does not make that possible. I ask my right hon. Friend the Minister to inquire whether it is possible to make up our deficit with European beet raws or, better still, by going to countries other than the ACP countries to get more cane. I fear that the Commission will not allow my right hon. Friend to do that, but at least he could try.
The third possibility is to introduce beet growing in Lancashire and Cheshire and convert the Sankey cane sugar refinery to beet refining. Even if we did that we should be in difficulties, because in normal years the EEC has a surplus and the full beet production in Europe is enough to meet all the requirements of the EEC. Therefore, I hope that in his reply my hon. Friend will deal with white ends and the reasons for the policy. It does not make sense. Need we have the high amount of 1·2 million tons of beet sugar? Not only is there the question of the variation in crop, but if we did not grow beet we could perhaps grow something else which might be equally nutritious, if not more so.
Finally, the question of cane and beet is not just of domestic importance but is a matter of relations with the Third World. Unfortunately, our imports of cane have already increased. In two months' time the UNCTAD Conference will be held in Nairobi. If this country is to show its concern for the Third World—if, indeed, the Common Market is to do that—I hope that there will be greater security for the African, Caribbean and Pacific States. Although they have the notional figure of 1·4 million tons, about which everyone has heard, there is no security in price. They must plant extra sugar cane soon, which will reach our sugar refineries after 1980. Unless they are given some security they will not want to send us the sugar.
The reductions in the industry will affect Clydeside, Merseyside and Thameside—areas of nineteenth-century industrial development which are now in great difficulty. It would be for the good of the nation, and ultimately the reputation of the common agricultural policy, if my right hon. Friend were to think twice about pursuing the sort of policies upon which the Government already appear to be set.

Mr. Speaker: I should explain to the House that it is hoped that the winding-up speeches will begin at 11 o'clock. Six hon. Members wish to catch my eye. If hon. Members will bear that in mind everyone who wishes to speak may do so.

10.8 p.m.

Mr. Neil Marten: The hon. Member for Gloucestershire, West (Mr. Watkinson) rather apologetically started his speech by saying that we were bringing back some of the old arguments about the Common Market. That is true. This price review debate illustrates that the Common Market is not working. It illustrates, in a way, what Mr. Tindemans said in the covering letter to his report, that the Common Market will fulfil its destiny only if it establishes federalism. I believe that the common agricultural policy will work only if the Common Market establishes federalism.
I do not believe that the farmers or the consumers will like the price review when it has been agreed. Generally speaking, I believe that quite a lot of chickens will come home to roost after the Minister has been to Brussels and signed on the dotted line.
I have always maintained that the CAP was a bad system. Under the CAP we pay to keep the price of food up. Under our old system we paid to keep the price of food down. If we have to pay either way, frankly I should rather pay to keep the price down than to keep it up. The British farmer would be far better outside this thing and having his own national agricultural policy, under our control, under which we could settle these things in the United Kingdom and not over the other side of the water.
One of the objects of the CAP is security of the supply of food. That matter was suddenly raised during the referendum campaign, although it seems to have died away slightly now because we are rather over-supplied in some items. Another object is to benefit the consumer and the farmer. However, I believe we are paying far too high a price for the security—so-called—of our food supplies, because in the world outside the Common Market there is cheaper food. One has only to look at page 18 of the document mentioned by the hon. Member for Newham, South (Mr Spearing) to see the extent to which the price of food is higher in the Common Market than it is outside it.
Common Market butter is 320 per cent. of world prices. In practice the British consumer at the end of next year will be having to pay 70p for a pound of butter. There will, therefore, be less butter, because consumers will not be able to afford it. They will try to turn to margarine. Already, as we have seen in the Scrutiny Committee, a little draft regulation has arisen about erucic acid. I do not know about this but I am told that it might be in order to keep the price of margarine up so as to force people back on to consuming high-priced butter—at 70p a pound. If that is so—I am just told; I am not such an expert that I know all about it—it rather illustrates the fact that the Commission is using the food standards to keep up the price in order to keep the butter mountain down. Time will tell whether that is what it is all about.
On the subject of skimmed milk powder, about which there has been much adverse comment in this debate, of course this will raise the price of animal feed by £4·50 a ton. That will be paid by the consumer, because that feedstuff is going into bacon, poultry and so on. Ultimately the consumer will have to pay. It is not the farmer who is suffering because of the mountain that he has created.
When we read the stocktaking document we thought that there would be some sharing of the burden of this surplus, but it is not so. Rather cunningly, it is being put all the way back on to the consumer. The Common Market Ministers have failed—

Mr. John Davies: Would my hon. Friend say that that was so in relation to the new system of orientation in terms of intervention?

Mr. Marten: I am sorry. I do not understand the question.

Mr. John Davies: I willingly repeat it. Would my hon. Friend say that it is the consumer who pays in relation to the new intervention system under an orientation system?

Mr. Marten: Under an orientation system? There was some doubt as to what precisely that means.

Mr. John Davies: Oh, no.

Mr. Marten: Clearly, however, if the price of feed is to be raised by £4·50 a ton—[Interruption.] If my hon. Friend the Member for Devon, West (Mr. Mills) has evidence to the contrary, let him produce it. I should be grateful to hear it. Whichever way one looks at the matter, the burden is being passed on to the consumer, ultimately, through the feed. My hon. Friend shakes his head. Perhaps he will deal with that when he makes his speech.
Furthermore, we are recycling this milk back into animal feed. That is just about the craziest thing that one could think of. People are now complaining that we did not create this mountain of dried milk, and therefore, why—as my right hon. Friend the Member for Knutsford (Mr. Davies) was implying—should we pay for it. I thought that my right hon. Friend was in favour of the Common Market and an integrated economy—that is what we are supposed to be aiming at—and that, therefore, if we have a surplus somewhere we have got to get rid of it by cutting down somewhere else. I feel that in his heart of hearts my right hon. Friend is much more of a nationalist than a Community person. I think that he illustrated that in his speech tonight.
The Common Market price of beef, according to the list, is 168 per cent. of world prices. Therefore, in two instances we find that there is cheaper food outside the Common Market. There is a plentiful supply of beef in Latin America, Australia and New Zealand. Once again the consumer suffers because of price rises and because we are inside the Common Market.
My right hon. Friend the Member for Knutsford said with pride that he supported the beef intervention system. I only hope he realises how many thousands of tons of beef are rotting away and will not be able to be eaten by human beings. That is not a very favourable way of treating beef. Anyway, it seems that my right hon. Friend is in favour of eating intervention beef. Beef is produced to be eaten. Let my right hon. Friend have a diet of intervention beef if he wishes. I hope that he will enjoy it.
I hope that the Conservative Party will join the Liberal Party in signing fully the motion which is on the Order Paper objecting to the intervention system for sheep meat. As has been explained, if we go ahead with the draft regulation it will probably increase the price of lamb by 50 per cent., making it more expensive in the shops than beef. If we go through the list we find that in January 1976 hard wheat cost £20 more in the Common Market than outside. Barley cost £15 a ton more and maize cost £20 a ton more. Where is the benefit to the consumer of being in the Common Market?
Where is the benefit to the farmer? I do not think that there is any need to talk about that. When the Price Review is completed the full blast of the settlement will come firmly upon the head of the Minister of Agriculture, Fisheries and Food. I shall leave the farmers to express their opinion about the great benefits that they have received after the price review.
I have no great enthusiasm for the common agricultural policy.

Mr. John Davies: We have noticed that.

Mr. Marten: I know that some of my right lion. Friends have great enthusiasm for it. It seems that they like frozen intervention beef.

Mr. John Davies: There is New York-dressed poultry.

Mr. Marten: Yes, there is that, and many other things. The National Farmers' Union supported entry into the Common Market. If it is a bad price review, the union must take a share of the responsibility. The CAP has satisfied few farmers or consumers, and it has hurt many people. I believe that it is a total and disastrous muddle. Many in this Chamber have made excuses for it, but, as the hon. Member for Londonderry (Mr. Ross) said, we can now begin to draw the stumps and reconsider. Let us consider it again from an all-party point of view. Let us have a Select Committee getting down to that sort of consideration. When that has been done there can be a stop to the argument because we shall know the real truth.
It is the poor who are suffering through the CAP. It is the poorest people who


are suffering the most. I was not elected to let the poor suffer because of the nightmare dreams of Continental bureaucrats.

10.19 p.m.

Mr. James Kilfedder: I promised that I should limit myself to a few remarks and, therefore, I can deal only briefly and superficially with a limited number of matters. I know that there are three hon. Members who wish to speak, and I should like them to have the opportunity to express their views to the Minister.
I think that the right hon. Gentleman needs to hear the anger of the House so that he can convey it to the meeting of the Council of Ministers next week. Criticism of the Minister has been expressed but he has done his best in many ways. He is certainly not the worst Minister of Agriculture, Fisheries and Food that we have had. That remark was meant in a kindly way.
The Minister will need to be pretty hard-headed and stubborn next week in the Common Market agriculture negotiations. The people who will benefit from these proposals will be the continental farmers in the EEC—in other words, inefficient farmers who pile up surpluses. These proposals will not benefit United Kingdom farmers.
The Government's White Paper "Food from our own resources" suggested that there would be expansion. I have seen no real signs of that expansion. The confidence of the farming community has not been fully restored, and this has been confirmed by the fall in expected output. Thes reason for this situation is the capital tax, which causes farmers great concern. Some are considering leaving agriculture, and certainly many farmers wonder how they are to obtain a fair return from their labours and a fair standard of living.
Farmers are sometimes blamed for increases in costs and prices, but this is not true. Farmers and consumers have the same interest—namely, a guaranteed and adequate supply of home-produced food. If there is a shortage—as there has been of potatoes—it is the consumer who suffers, but the farmer certainly does not benefit. The farmers want to see a system that ensures adequate output. That will help the consumer because he

will be protected in times of shortage and in times of price fluctuations. We must not seek to undermine farming communities. Instead, every effort must be made to persuade farmers to invest more, and certainly to produce more.
The proposals outlined by the Minister do not give the encouragement which is required. Words are not sufficient. Farmers are rightly wary of Government promises. They have heard them before. What incentive is there? Prices everywhere are rising. But farm incomes in real terms have dropped behind other incomes in the past two years. It is not surprising that agricultural production rose by only 2 per cent. in the United Kingdom compared with the far greater increase in some Common Market countries.
It is wrong to agree to a Common Market proposal—and I hope the Minister will not agree to it—providing for the compulsory incorporation of skimmed milk powder in feeding stuffs. This will add £4·50 per ton to the cost of feed. It will raise the costs of pigs and poultry. We must remember that Northeren Ireland imports over three-quarters of its feeding stuffs. It will mean a further blow to Northern Ireland farmers. The National Farmers' Union has already made clear that the Commission's proposals on milk give no assurance of any increase in the return to producers in view of the proposal to withdraw the firm intervention arrangements for skimmed milk powder. This will not promote expansion of dairy herds and will increase uncertainty.
It was wrong for the Commission to propose the phasing out of the beef premium. It is vital to retain that premium. It is particularly vital to Northern Ireland because the present scheme incorporates special protection for Northern Ireland producers when a premium is payable, and Northern Irish market prices fall substantially behind prices in Great Britain. I hope that the Minister will be able to have his way in the Common Market but he will have to fight hard for the farmers.
There is no doubt that a full adjustment of the green pound to the true value of sterling is essential for the creation of fair competitive conditions for British farmers.
Will the Minister examine the position of the horticultural industry? The glasshouse producers should have a subsidy on oil to enable them to compete with the Dutch growers, who have a full subsidy from their Government. Without this help, the horticulture industry in Northern Ireland, and certainly in my constituency, will continue to suffer, and production will decline. It ought to be recognised that the horticulture industry contributes substantially to food production in the United Kingdom.
I urge the Minister to fight hard next week for the farmers of this country.

10.25 p.m.

Mr. Peter Mills: I count it a very great privilege to be on the Scrutiny Committee, and I should like to pay a tribute to its chairman. If my right hon. Friend the Member for Knutsford (Mr. Davies) were not the chairman, I should not want to continue. His enthusiasm and encouragement keep us going in a Committee which has an extremely difficult and arduous task.
It seems a pity that so many people who have spoken have been anti-Common Marketeers. There is another very real and important side to it, and we ought to be supporting the Minister in his fight in Brussels.
A great deal of nonsense has been talked in this debate. I am sarry that the hon. Member for Londonderry (Mr. Ross), is out of his seat now, because lie actually made a statement that beef could be produced for £6 per cwt. A 10 cwt. bullock costs £60, and the calf costs £20–£25 at least. According to the hon. Gentleman's argument, it means that for two and a half years the rearing has to be done for something like £30. It is really pathetic that anyone should come to this House and make such misleading statements, when one knows that no one could possibly produce a bullock for that sort of figure.
My worry about the green pound is that, because of our poor economic position, this problem could be with us for a considerable time to come. I do not see why the British farmer should have to bear the burden of the green pound. For how many years will this have to

continue? Until we improve the economic position of our country, the green pound will continue. I hope, therefore, that the Minister of Agriculture will watch this question very carefully, adjusting frequently so that British agriculture does not carry the main burden of the green pound all the time.
Concerning the general level of price increases, I say to my hon. Friends—and should like to have said to hon. Members on the Government side who seem to have disappeared—that British agriculture is having to bear increased costs, just as the car manufacturers and any other producers are having to bear increased costs. With rising costs everywhere, why is it that British agriculture should not be expected to recover its costs in production? That is the problem.
I hope that the Minister will fight very hard in Brussels to see that at least our costs are covered. We are not asking to become very rich people. We just want a fair price to cover our costs. That is very important.
Concerning the whole problem of surpluses. I can well appreciate that there are people who do not understand it. I understand why those who are against the Common Market criticise this aspect of it, but it is a matter for the Community putting its house into the right order.
The Community has a lot to learn about how to deal with the problems of production and marketing. In this country that excellent organisation, the Milk Marketing Board, exerts discipline and controls and encourages liquid milk sales, so that we do not have the problems that confront other countries in the Community.
The whole object of my life at the moment is to try to encourage the Community to adopt a similar system, so that milk can be channelled into the right quarters and be sold and marketed in a proper way.
The problems of surpluses in the Community at the present time—particularly dairy surpluses—should be tackled in three ways. First, I want to see intervention prices varied according to the areas of production. This is essential if we are to get anywhere in the Community in dealing with this problem of surpluses. There is no point in making it difficult for


us in this country to produce milk, because we need it. What is the use of my having in my constituency a milk factory producing cheese which is working at only half capacity? We need to deal with the problems of surpluses for those who create them, and intervention prices should be varied according to areas of over-production. This is not new. It happens here. The variation between prices in South-East Kent and the South-West is a considerable sum of money per gallon. We have varying prices in Great Britain. Why cannot we have them in the Community? They would act as a discipline on those who are prepared just to produce milk for butter production and thereby create surpluses.
Secondly, the Community needs to put its house in order in terms of a proper marketing system for milk and encouraging the consumption of liquid milk, bearing in mind the discipline which that would create on producers in certain areas.
Thirdly, I want to see a much better regional policy in the Community. Alternative jobs must be provided for the producers in these difficult areas. If they cannot turn to any other form of employment, it is extremely difficult for them to get out of the same old way of a few cows producing more and more milk, resulting in more and more butter and skimmed milk powder mountains. We need to get the structure right in the regions. We need to see that there is alternative employment for some of these people who must get out of agriculture because they are inefficient. We need a real strengthening of our regional policy in the Community. Those are the three requirements: variable intervention prices, a proper milk marketing board system, with all that that means in the Community, and getting the structure of the regions right. They would do far more to deal with these surpluses than any of the proposals before us tonight. I feel strongly that these requirements must be met.
Finally, I deal with the question which my hon. Friend the Member for Banbury (Mr. Marten) asked. Unfortunately, he is not present at the moment. But I hope that he will read my reply in Hansard—[Interruption.] I am glad to see my hon. Friend back with us. I am afraid that he is ill-informed. The

change from a mixed intervention price to an orientation price works right back to the producer. More than that, it is a radical change from what has happened in the Community in the past. We have never had such a radical change as regards intervention. This is putting it directly back on the producer, and not the consumer. If my hon. Friend studies these proposals carefully, he will see that it does not even mean that the Community has to buy. It is a very open-ended arrangement, and it could be that the Community might not accept the tenders. That means that a very real discipline is back on the producer, because in certain areas in the Community they must put their house in order, as opposed to us.

Mr. Marten: I had just stepped out for a much-needed cup of coffee. If the producer has to bear the cost, will he not pass it on to the consumer?

Mr. Mills: My hon. Friend has missed the point. It is no use a producer producing purely for surplus. Discipline has to work back to him. That is why I regret that my hon. Friend was not here when I was talking about variable intervention rates, which would again work back to the producer. That would help the producer by allowing him to avoid paying high taxes for this intervention system.
There is a subsidy for the production of whole milk powder, which I regret. The money spent is a terrible waste. The money should be used instead to promote the sales of liquid milk, as British farmers have to bear the cost in this country. We should be encouraging the drinking of more milk in the Community.
I hope that the Minister will bear particularly in mind my three points about surpluses.

10.36 p.m.

Mr. Colin Shepherd: The common agricultural policy is the absolute linchpin of the EEC and it must work to the benefit of the producer and the consumer even-handedly throughout the nine member countries. If it does not do so at the moment, that is no reason for throwing it out lock, stock and barrel. It is all the more reason for working on it to make it achieve the ends for which it was designed.
I should like to congratulate my hon. Friend the Member for Banbury (Mr. Marten) on taking part in the deliberations of the Select Committee although his views are contrary to the common agricultural policy. His Devil's advocacy is of great value to the Committee in throwing up possible weaknesses which can then be rectified.
The Government's own policy at this time must be to achieve the same balance between the producer and the consumer. They published their White Paper as a means to this end. Their objective now must be to achieve a balance on the Common Market front and the national front.
I am an ardent supporter of the CAP, although it is obviously not free from criticism. That is not to say that it is not right to show up some of its short-comings. We know that there is a tendency at the moment to create surpluses without having prepared before-hand a method for dealing with them. There is nothing wrong with a modest surplus, but it is apparent now that intervention alone does not work. It needs some other system with it. There is a tendency to create a climate in which producers produce for surplus alone and not for market needs. The 66 per cent. of Denmark's milk production which shows this very well. There is also a tendency to divorce milk production from orderly marketing, which is giving rise to many problems.
At the moment, EEC prices are generally higher than world prices. That is not necessarily a bad thing, provided that continuity of supply is maintained. Continuity of supply has been dismissed out of hand by many previous speakers, but I take the view that it is like happiness: one does not realise that one does not have it until it is gone. The potato is a great indicator of that. It is well worth a premium for continuity of supply. No one can dispute the considerable success of the Community over the last 12 months in ensuring continuity of supply for a vast range of products—beef, for example. Beef has been in the shops at a reasonable price for the last 12 months, and with a stability of price which has been very acceptable. The Commission has a responsibility to ensure a fair standard of living for the agricultural community as well. But in 1975

there was a net loss relative to non-agricultural real incomes.
The next matter is one that it would be wrong to say my hon. Friend the Member for Banbury has an obsession with, because I think that the CAP has an obsession with harmonisation where none is necessary. Let us allow market forces to do the work. The question of the composition of mayonnaise comes to mind. I personally am a substantial market force when it comes to that product compared with any other hon. Member. Allowing market forces to do the work could save a great deal of bureaucracy and paperwork. I am considering indenting for a wheelbarrow to take away my documents from the Vote Office, or taking shares in the photo-copying industry.
There have been a number of short-comings in Government policy on agriculture, and they must be related to the review. There is a reluctance to press for a devaluation of the green pound, wrongly based on a desire to keep food costs lower than they would otherwise be. As a result, returns to producers have been somewhat lower than they should be, resulting in a reluctance to expand their home production. That is seen in agricultural production for the past year, which was 6 per cent. to 7 per cent. less than it was the year before, although it must be admitted that the weather had an effect.
There is a tendency to confused party dogma with practical necessity. Uncertainty and mistrust over such issues as tied cottages, landlord-tenant relationships and disincentives based on capital taxation have caused an acute lack of confidence among home producers.
These are some of the factors which must influence our consideration of the proposals. It is essential that eventually the Community develops a wide, overall strategic view, so that the need for short-term measures is reduced to an occasional touch on the tiller as the CAP develops. This would cut the ground from under the feet of the detractors of the CAP. We must be careful never to put ourselves in the position that we have been in of late, that for every solution we have had a problem. We must get it the other way round. Let us have solutions to problems.
The Government would do well to grasp the nettle of green pound devaluation firmly right away. It would do substantially less damage to their fight against inflation if they did it now rather than let the matter drag on. I do not think that we are necessarily at the bottom of the slide of the differential between sterling and the other currencies of the world. We might as well catch up now and move towards something like parity. It would be a great help to the producer, and would not have all that dramatic an effect on the cost of living index.
I come to the other related measures. Paragraph 19 of the document R/3166/75 sets out the areas of improvement to be achieved. Paragraph 20, which is relevant to our situation, underlines the need to consider the milk-beef-veal complex as a whole. It says:
As regards the milk and beef and veal sectors in particular the Commission is aware of the serious imbalance of the milk sector since 1968 and that the prospects are unfavourable in the medium-term. It is for this reason that it is proposing to the Council a series of measures relating both to milk and to beef and veal and including measures on prices, the organisation of markets and structural adjustments. It considers that it is only by simultaneously implementing a whole series of incisive measures that the equilibrium of the markets in the milk sector will be re-estabslished.
That is the correct approach and the first part of the equation must be with the beef industry.
I am delighted that the Minister of State has shown his determination repeatedly this evening to fight for the retention of the variable premium scheme. This is accepted in the beef industry in my part of the world, and it has been successful in developing confidence. It has had the effect of matching production to seasonal needs and variations. It has also had the side effect of creating stable prices to the consumer over the last 12 months. I wish the Minister success on that point, but it may be that he has to give a little in some other direction. If he considers making concessions about the skimmed milk pile it would be best if he were to opt for the recycling approach, asking for FEOGA or Community funds to cover the cost.
This would have the effect of turning the surplus inwards into the market in a manner which the public would understand, rather than selling it off to Russia,

which they do not understand. I am certain that a large percentage of the public cannot understand why we sell our surpluses to our ideological enemies to keep them in business when their own lousy management of agriculture has created such shortages.
Solutions are possible. The Community came up with the successful solution to the butter problem with the butter premium. The beef premium had the effect of turning the surplus inwards. There is a cost to this approach, but the cost is preferable to trying to recoup a small amount of visible cash through selling the produce outside the Community.
The other proposal which must be tackled very delicately is that of encouraging small smilk producers to go out of business. Much has been said about the efficiency of milk production in this country. The level of incentive must be selective so as not to encourage the wrong producers, bearing in mind that about 50 per cent. would be eligible. However, it must be sufficiently high-geared to encourage the French and Danish producers to opt out and go into something more worth while. It is not an easy equation to mate up, and I wish the Minister well in his attempts.
I can detect small alarm bells ringing in the back of my mind about whole-milk powder and subsidies for its production. The answer must be to encourage the consumption of milk rather than run the risk of building up another pile of whole-milk powder. The Minister has a tortuous path to tread if he is to obtain for our consumers and the agricultural community a fair balance of supply, price and reward, all coupled with confidence for the future. However, our producers would like to be able to compete on equal terms with those elsewhere in the Community, and here it is vital to consider putting pressure on the Government to accept that the present state of taxation on capital and income is unacceptable as a fair basis for competition. I hope that no effort will be spared in trying to harmonise our taxation downwards.

10.49 p.m.

Mr. Nicholas Winterton: We have had a helpful and constructive debate. I believe that the hon. Member for Newham, (Mr Spearing)


described the debate as the annual general meeting leading up to the Common Market price review. That is an accurate description of our proceedings, and I hope that the Minister is receptive to many of the points which have been made.
I draw particular attention to the forceful contribution by the hon. Member for Londonderry (Mr. Ross.) I did not agree with many of his opinions or the assumptions on which he based some of his arguments, but he raised some very interesting points which I hope the Minister will take to Europe next week to bring out in the very hard debates which lie ahead.
I should like to congratulate and pay tribute to my right hon. Friend and near neighbour, the Member for Knutsford (Mr. Davies). Like me, he represents an extremely good agricultural constituency, and the work he has done in the arduous task of Chairman of the Select Committee on Secondary Legislation makes the work of the House much simpler. We owe him a great debt of gratitude.
I would remind the hon. Member for Londonderry that, in opening the debate for the Opposition, my right hon. Friend the Member for Cambridgeshire (Mr. Pym) stated clearly his belief that we must not encourage our smaller dairy farmers to go out of business, because they do an extremely good job and they would be sadly missed. The small dairy farmer in this country is very different from the small dairy farmer on the Continent. I believe we need an increase in milk production in this country, and the smaller dairy farmer is important in achieving this objective.
I should like to draw the attention of the Minister and the House to a statement made by one of my constituents who is on the Council of the NFU, was chairman of the Cheshire county branch of the union last year and was previously chairman of the Macclesfield branch. He has said:
To those who believe there is no need to expand home milk production because North Sea Oil will buy all the milk products we shall need in the future, I say this: All the surplus revenue from oil in the 1980s will not even redeem our national heritage from the international pawnbroker, and certainly there will be no money available in the near future to buy milk products on a world market in which

shortages will, in any case become the dominant feature.
He knows the industry and runs a highly successful farm. He takes a considerable interest in European and United Kingdom matters and, in a very few years, has risen to the top rank in the union.
He also believes that the present potato shortage and the recent sugar scare can both be blamed on short-sighted planning by successive Governments which have failed to guarantee fair prices for surplus production.
My hon. Friend the Member for Hereford (Mr. Shepherd) was quite right to bring to the Minister's attention the fact that the British farmer is looking for fair competition—no more, no less.
Cheshire is a large milk-producing area and what happens in negotiations in the next few weeks will be of great importance to my constituents. I hope the Minister will make some comment about standardisation, which is causing some concern in the dairy trades.
I thought my hon. Friend the Member for Devon, West (Mr. Mills) put forward a very constructive suggestion when he proposed a variable intervention price. I hope that proposal will be examined on the European scene, because it holds a great deal of promise for the future.
We do not produce a milk surplus in the United Kingdom. We can scarcely produce enough milk to fulfil all our requirements. We need to import considerable quantities of milk products, and many butter and cheese factories have closed down or are on short time because of the shortage of milk. We need to produce more milk, and I hope that the Minister will take that message to Europe.
I pay tribute to the Milk Marketing Board and the Potato Marketing Board, which do a wonderful job in guaranteeing a fall-back price to the farmer and providing stability of supply for the consumer. The setting up of similar boards might be a future development for the EEC. In the promotion of liquid milk in the United Kingdom the Milk Marketing Board, the Dairy Trades Federation and all involved have done a wonderful job. Europe should follow our example.
From information which has come from interested bodies, including the


NFU, there is no doubt that the proposed EEC price review is not altogether acceptable. EEC farm incomes as a whole fell by almost one-fifth in real terms in 1974. The gap between farm earnings and non-agricultural earnings almost certainly widened in 1975. The Commission's proposals for an average increase in farm prices of 7·5 per cent., which is worth much less in practice because of a combination of special measures for certain commodities and various monetary adjustments, would do nothing to reverse this recent trend. I hope that my hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) will comment on that.
Heading the farmers' objections and grievances is the absence of provision for further adjustment of the United Kingdom representative rate of exchange, commonly known as the green pound. Despite adjustments made by the Minister, which we welcome, it remains over-valued, and that is very much to the detriment of our farmers. Although I realise that because of the consumer aspect the Minister is unwilling to make further adjustments, I hope that he will accept that another adjustment is necessary.
May I now refer to an article by Jim Murray of the Farmers Guardian, in which he said:
The total of the Commission's package amounts to a rise of about 7½per cent., on average farm prices. Some observers and some participants in Brussels believe that this may be pushed up a few points to, say, 8 per cent. The European Parliamen's rapporteur, the Dutch Christian Democrat Mr. De Koning, has stated in a report to his agricultural committee that this needs to be raised to 9.5 per cent. to cover increased farm costs.
Surely it is right that the increased costs which the farmers have had to bear should be met and that the prices guaranteed to them should reflect the additional costs.
My right hon. Friend the Member for Cambridgeshire said that in the past two years there had been a cut in farmers' incomes of about 30 per cent. in real terms. Farmers are unable to provide investment for expansion. In my constituency good livestock farmers who are making a profit tell me that they are unable to keep up with the normal replacement of machinery. The longer they

delay in replacing machinery, the more inflation puts it further out of reach. They are worried as to how they will catch up and what will happen when the machinery they are using, perhaps beyond its useful life, finally wears out.
The only way they can re-equip is to borrow heavily at high rates of interest, and the long-term confidence is not there for them to do it. The price review as it stands will not give the farming industry the confidence it needs, and without confidence not only will expansion not take place but there will be grave danger of a further fall in production. The Minister published a White Paper, "Food from our own Resources", putting forward expansion plans. Let him go to Europe next week and ensure that this expansion can take place.

11.0 p.m.

Mr. James Scott-Hopkins: The debate is most fortunately timed by the Government, although, in the circumstances, perhaps a little inconvenient for me. It is rare, as has been said, that we get an opportunity to put our views to the Minister before he negotiates with his colleagues in the Council of Ministers, as he will be doing next week. He will now have the benefit of the House's views on the proposals of the Commission. I wish we could have done this before the Minister came back with the annual price review proposals in the old days before we joined the EEC. This is a great step forward.
There is another advantage in having the debate today. I have just returned from Strasbourg, where the European Parliament finalised and voted on recommendations on the various proposals of the Commission. The main recommendation, supported by a two-thirds' majority, was that there should be an increase from 7½5per cent. to 9½5 per cent. in the overall increase in the price review.
I was therefore surprised when the right hon. Gentleman said that he was not only worried about the 7½5 per cent. but thought that it could be a little lower. As my right hon. Friend the Member for Cambridgeshire (Mr. Pym) said, the reverse is true. Farmers' input costs have increased almost 10 per cent. It will be an impossible situation if the Minister starts from a bargaining position of wanting even less than 7½5 per


cent. Now that the European Parliament has given him and the Commission more scope in the negotiations, I hope that the right hon. Gentleman will not maintain a rigid view that 7½5 per cent. is the upper limit and that, if possible, the increase should be less. If he does, he will do farming an injury from which it will take a long time to recover.
There has been almost a structural change in the method whereby the common agricultural policy is supporting various products. There has been an increase in the target price of almost all the products. The increase in the intervention price for the main products has been much less, and in some cases the intervention price has dropped. The variation is much greater now between the target and the intervention prices, and that is a good development.
The Minister should not forget that at the end of the day it is the intervention price which is the guarantee. He may not approve of the system, but it is that price which is of maximum importance to the farmer-producer. It is the target price which is of importance to the importers and compounders. The figure of 5½5 per cent., which my hon. Friend the Member for Macclesfield (Mr. Winterton) said was the real increase proposed by the Commission, is the one being advanced. That simply is not enough. I hope that the right hon. Gentleman will start from 7½5 per cent, and go up from there. He has been given room to manoeuvre by the recommendation of his colleagues at the European Parliament.
I want to deal with some of the main products. I am glad the right hon. Gentleman accepts that it is right to bring feed grain into line and to do away with the regionalisation of prices. It will take time to do this and it will have to be done in steps. However, my hon. Friend the Member for Devon, West (Mr. Mills) has proposed—and the Commission is studying it—that there should be a specialisation in the regions so that the regions which are specially suited for particular commodities should grow them. For example, in most parts of the United Kingdom grass grows well, and it therefore follows that dairy and beef farming should predominate. Cereals grow well in parts of the central basin of France and around Paris.
Differentials should be worked out on the level of the intervention price—not on the level of the target price—depending on the priority which the Commission, after consultation with the various national Governments, attaches to a particular region specialising in a particular product. We have put that suggestion forward many times at the European Parliament. I hope that the Commission is studying it. I hope that the right hon. Gentleman will think about it and put it forward in the forthcoming negotiations.
I am a little worried about the lack of emphasis being placed on the production of more feed for the coming season. The farmers have been critical that these changes have been made public fairly late. It would have been better if we had been informed of them earlier.
I am glad that in principle the Minister accepts that feed grain should remain at its present level. Until we get the bread-baking test properly defined—that will be the right hon. Gentleman's responsibility—each country will have to work out its own method. I beg the Minister not to bring in the 15 per cent. premium but to keep things as they are at present. The 15 per cent. premium for milling wheat is the right differential, but unless there is a proper method of testing it will be open to so many frauds that we must have second thoughts about it.
I turn to the important subject of milk. I congratulate my right hon. Friend the Member for Knutsford (Mr. Davies) on the work of his Committee and on his remarks. He mentioned the milk proposals. I hope hon. Members realise that all these proposals have to be taken together as one package. We can discuss the various parts individually—for example, the non-distributive part of milk, what is being done about skimmed milk powder and so on. However, they have to be taken together.
I hope that the Minister will take up the one glaring inadequacy in these proposals, namely, that although the Commission says that it wants to encourage liquid milk consumption—and a small amount is being used in school meals—it is not putting in any money worth talking about. There should be a campaign throughout Europe to encourage


liquid milk consumption. It is not easy, however, to change people's habits.
The Commission is also not putting forward any proposals for increasing liquid skimmed milk consumption. The Commission says that it will do so, but there are no recommendations. This is lunacy. If one makes milk, one will have skimmed milk. It is no use consuming energy and power to dry it off and then putting liquid back into it later. It is far better to use it and feed it straight to the animals that need it—in other words, pigs. This will not happen unless there is a reasonable inducement to do it. I beg the right hon. Gentleman to attend to that point as quickly as possible.
There are one or two other points concerning liquid milk. My hon. Friend the Member for Banbury (Mr. Marten) and I have always been friends over these matters. I admire him and his arguments so much that I find it frightfully difficult to say that he was talking absolute nonsense—but he was, particularly about the skimmed milk powder.

Mr. Marten: I must quickly correct that point.

Mr. Scott-Hopkins: No, there is no time. My hon. Friend must listen to what I say. No doubt we shall have a tremendous talk about it later at some more suitable moment.
As my hon. Friend the Member for Devon, West said, for the first time there is a reference guide price for skimmed dried milk. It is to come in from 15th September of this year. That can range between 94 per cent. and 102 per cent. of the target price for skimmed milk. Within that range, tenders will be submitted for whatever quantities are available at the time. If the tenders do not come in, that milk does not get sold.
However, the price can be as low as 94 per cent. of the target price. In other words, the tenders will all be at the market price at present, inevitably—in other words, the bottom price. The farming community is saying "We do not like this much. It gives us no bottom guarantee for this product." My reply—and I hope that of the right hon. Gentleman—is "No, it does not, but at the same time we do not want to encourage any more of this reducing of milk for intervention, particularly dried skimmed

milk straight into intervention." If this will stop that or slow it down, as I think it will, it must be acceptable and the right thing to do.
I am delighted that the right hon. Gentleman is going to stick to his guns over the beef premia. In the European Parliament we managed to succeed in keeping a two-stage proposal on milk, but we did not succeed in this respect. Although a healthy number of members, not only from the United Kingdom but from other countries, voted for the premia to be retained, unhappily we did not get a majority. I hope that the right hon. Gentleman will at least maintain the variable element even if he has to give up the fixed element. There is a certain amount of sympathy for this, not only among members of the European Parliament but also in the Commission.
As I understand it, the proposals for a sheep regime throughout the Community have been sent back to the Commission for rethinking again by the European Parliament. New and, I hope, better proposals will be coming forward in the near future. Certainly the Commission's proposals would not have had the effect about which the hon. Member for Southampton, Test (Mr. Gould) was talking—raising the price by 50 per cent. However, they would have given Eire—and, indeed, this country—access to the French market for the first time, without allowing the French to bring down the chopper whenever they chose when the prices got too weak. However, those proposals were not sufficiently sound. They have gone back to the Commission. They will not be before the right hon. Gentleman until they have been thought out again.
As regards horticulture, it was the right hon. Gentleman himself who cut off the support that he could have given and in which he could have had help from the FEOGA funds for glasshouse growers in the United Kingdom. We were the first to give support, but we were the first to cut it. We did so while others were still getting it. I hope that the right hon. Gentleman will think about that again.
An issue that appears to be small but which is important to some, and especially in the West Country, concerns cauliflowers between January and March 1977. I hope that the right hon. Gentleman will


try to get an extra 20 per cent on the withdrawal price.
All in all, I hope that the right hon. Gentleman will go to Brussels fortified by this debate. The House has been saying that what has been achieved so far goes a little way on the right road and that there is a great deal more to be done. There is now the opportunity to improve and increase stability and to restore some of the confidence within the farming industry which is so badly lacking. The means exist, and I hope that the right hon. Gentleman will take the opportunity next week to bring about what he and his White Paper have spoken of—namely, improved production from our farms. He can do it, and if he does it I am certain that Members on both sides of the House will wish him well.

11.17 p.m.

The Secretary of State for Wales (Mr. John Morris): I am grateful to the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) for the good wishes which he, like so many others on both sides of the House, has expressed to my right hon. Friend the Minister of Agriculture, Fisheries and Food for his forthcoming discussions in Brussels. The hon. Gentleman reiterated the comment of his hon. Friend the Member for Devizes (Mr. Morrison) that this is the right timing for such a debate. I endorse that view. I have listened to almost every speech throughout the debate, as has my right hon. Friend, and what has been said will be borne in mind. Comments have been made which will fortify my right hon. Friend, and certain points have been underlined. I believe that the whole of the debate has been exceedingly useful.
Some hon. Members have related their remarks to the whole state of the agriculture industry. I do not want to follow them in that course. It was my hon. Friend the Member for Gloucestershire, West (Mr. Watkinson) who referred to the criterion of assisting the efficient farmer. We believe that the common policy should provide effective support for many producers without imposing undue burdens on consumers or taxpayers.
I believe that the Scrutiny Committee has done invaluable work. I endorse what has already been said about its work. We have made full use this year of our annual review discussions so as

to be fully informed of our agriculture industry's views in formulating our approach to the Commission's proposals. I know that it will bring pleasure to both sides of the House, and especially to my hon. Friend the Member for West Bromwich, West (Miss Boothroyd), when I say that we have extended the range of consultations to include consumer organisations. In short, we have integrated our annual review more closely into the preparations for the negotiations in Brussels. We shall be publishing the results of the annual review—it was on this matter that the hon. Member for Cardigan (Mr. Howells) spoke about timing—with the decisions which will be taken here and in Brussels. It is not yet clear whether the Council of Ministers will be able to reach a conclusion at its meeting on 23rd–24th February, but we hope that it can do so.
I think we have all recognised—this has been the tenor of the debate from beginning to end—that there were many problems for farmers last year. The weather was unfavourable until the autumn and especially affected yields of cereals, potatoes and sugar beet. Cost inflation was a burden on farmers as on other sections of the community. Fortunately the open autumn and early winter did much to make up for losses in the spring and summer. We have seen good results already in increased milk production, and there are good signs as regards the planting of winter wheat.
We are all conscious that the better weather will not be fully reflected in agricultural output until 1976–77. Net production in 1975–76 will undoubtedly be hard hit by the large fall in the cereal harvest. Nevertheless, while there were setbacks in 1975, there has recently been a good recovery of confidence and output.
We as a Government are determined to curb inflation, and we have also taken major steps since the last review to improve the support that is available to producers. It is well to recognise that factor.
The green pound changes in August and October and the accompanying increases in the guaranteed price for milk were clear evidence of our continuing commitment to United Kingdom agriculture. I am sure that those decisions have contributed substantially to returning confidence. We intend to build on this


by giving our farmers a fair deal in the forthcoming decisions on support for 1976–77.
I turn to the Commission's 1976–77 price proposals. The negotiations on these proposals are particularly important because they represent an opportunity to continue our efforts to secure certain improvements in the operation of the CAP. The Commission's proposals recognise some of the more important issues identified during last year's stock-taking discussions.
My right hon. Friend the Minister was asked on the subject of milk whether there was a contradiction between higher output in the United Kingdom and restraint in Community prices. There is a fallacy in that respect, as some hon. Members recognise. It is essential to recognise that we are still in transition. Community prices for milk and milk products have been running at high levels for some time. Returns to United Kingdom dairy farmers have been moving up but have not yet reached Community levels. Hence the differences in production and aims. It is unrealistic to compare the position of continental and United Kingdom dairy farmers last year as if the transition had been completed. At full Community prices, our dairy farmers should be able to take advantage of their good structure and climate.
There has already been a big swing within the European Community towards milk production in the grasslands areas. In the last 10 years milk production has gone up by 25 per cent. in the grassland areas and has fallen by about 20 per cent. in non-grassland areas. There is no reason why this trend should not continue to our benefit.
The right hon. Member for Cambridge-shire (Mr. Pym) asked for assurances about the use of intervention in cereals. The remaining cereal guarantees will end in July under the transitional arrangements negotiated by the Conservative Government. We already have intervention prices. Intervention will be available, if necessary, for United Kingdom cereal producers. I hope that that is an assurance hon. Gentlemen wish to hear. [HON. MEMBERS: "Hear, hear."]
The right hon. Gentleman also asked, as did other hon. Members, about the

proposed new intervention arrangements for skimmed milk powder. As my right hon. Friend said, these represent an important move to more flexible intervention. This was spelt out in the speech of the hon. Member for Derbyshire, West. Some such action to avoid the continuing accumulation of surplus stocks is essential. Producers will not be without any support. Subject to the supplies available, tenders would be accepted within a range of 94 to 102 per cent. of the proposed new reference price. There could also be arrangements to vary the packaging and quality conditions for support buying. I understand the concern expressed by some producers, but we believe it is right that the present intervention arrangements should be altered.
We were asked about compulsory incorporation of skimmed milk powder in animal feed. Again, I understand the concern of those who oppose compulsory incorporation. Such compulsion is, in principle, undesirable. Livestock producers' and feed manufacturers' costs will be increased. The point was made by the hon. Member for Londonderry (Mr. Ross). It will certainly not be easy—I emphasise this—to administer the scheme which the Commission has proposed and to avoid unfair discrimination between different users. There is also the special problem for us that there are only small stocks of skimmed milk powder available here, although the Commission proposes to make an allowance for the extra transport costs involved.
On the other hand, we must face the fact that there are large accumulated stocks of skimmed milk powder. While I hope that the Council will agree on measures which discourage the further accumulation of stocks, the existing stocks must be disposed of. The main outlet available is animal feed. Disposing of these stocks for feed is inevitably expensive. The main question is how and where the cost should fall. A purely voluntary scheme would involve much larger budgetary costs. I have the figures.
I assure the House that, in the forth-coming negotiations on the Commission's proposals, we shall bear in mind the points which have been made tonight. We shall certainly be anxious to secure


the fairest and most sensible arrangements we can. The hon. Member for Londonderry expressed his fears, but I am given to understand that my right hon. Friend the Secretary of State for Northern Ireland has just announced a scheme of aid for employment in the pig and poultry sectors in Northern Ireland through higher feed price allowances. I hope that this will be welcomed in Northern Ireland.
My hon. Friend the Member for Southampton, Test (Mr. Gould) mentioned sheepmeat, as did other hon. Members. We do not expect a regime on sheepmeat to be part of the package of measures now under discussion. We have made quite clear that we would not agree to a regime which did not take account of the interests of our consumers as well as of our producers.
Concerning the average level of price increases, we have had comments throughout the debate on the proposed average level of support prices. I emphasise also that the support price increases in national currencies in most member States will be less than 7½5 per cent. None the less, my right hon. Friend said in his opening remarks that the Government regard the Commission's proposals as being on the high side. In the current economic situation, and given the serious problems of over-supply in some sectors, it seems to us that constraint is called for.
There is not the time to go into the argument concerning the existence of and the changes in the green pound, but I am sure that hon. Members on both sides of the House are aware of the reason why it is there and the role it plays, and certainly the need for it. There would otherwise have to be changes with every change in a particular currency's market value, leading to great uncertainty and instability in floating currencies. My right hon. Friend has made quite clear that we continue to keep the level of the green pound under review.
I have dealt with as many of the issues raised as I can in the time available, and I assure the House that all the points which have been made will be kept in mind in the forthcoming negotiations.

Indeed, I hope that our negotiating position will be strengthened as a result of the debate. The Council of Ministers will be meeting again next week and is due to have a further session, as I have already told the House, on 23rd and 24th February.
I know that in the negotiations my right hon. Friend will be exerting all his efforts to secure an outcome which is fair both to producers and to consumers and which in no way puts at risk the strategy for agriculture set out in the White Paper "Food from our own resources."

Amendment agreed to.

Main Question, as amended, agreed to.

Resolved,
That this House takes note of Commission documents R/3166/75 and R/3271/75 and, in respect of R/3166/75, of the Government's intention, taking account of the needs of producers and consumers and the importance of restraining public expenditure, to seek both satisfactory levels of agricultural support prices and further improvements in the operation of the common agricultural policy, especially in the milk and cereals sectors, and to maintain the provision for variable slaughter premiums in the EEC beef regime along the lines of the arrangements secured as part of the renegotiated terms of EEC membership and urges Her Majesty's Government to ensure that the competitive and structural advantages of United Kingdom agriculture are maintained.

STATUTORY INSTRUMENTS

Motion made, and Question put forth-with pursuant to Standing Order No. 73A (Statutory Instruments, &amp;c.),

RATING AND VALUATION

That the Post Office (Rateable Values) Order 1976, a copy of which was laid before this House on 15th January, be approved.—[Mr. Dormand.]

That the Post Office (Rateable Values) (Amendment) Order 1976, a copy of which was laid before this House on 2nd February be approved.—[Mr. Dormand.]

Question agreed to.

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dormand.]

GRANT-AIDED SCHOOLS (SCOTLAND)

11.30 p.m.

Mr. Malcolm Rifkind: I am grateful for the opportunity to raise on the motion for the Adjournment the subject of Government policy towards grant-aided schools in Scotland. No one will doubt that this is a matter of the gravest concern, not merely to the parents, pupils and teachers in the schools, themselves, but to all those interested in the quality of education throughout Scotland.
For some years the Labour Party has had the reputation, in education matters, of being more concerned with ideology than with the actual practical effects of its policy on parents, teachers and children. Sadly, this is nowhere more apparent than in regard to grant-aided schools in Scotland and independent schools in England and Wales.
I do not wish tonight to concentrate on the general merits of the Government's policy. We have gone over these matters previously, and I doubt whether the Minister will be swayed on the matter this evening. That is not because I do not believe that he is flexible; I am happy to concede in the presence of those hon. Members who are present tonight that the Minister is the epitome of sweet reasonableness. However, I suspect that on this matter he has received his directions from his right hon. Friend the Secretary of State for Scotland that there should be no quarter, no compromise and no questioning of the fundamental principles of the Government's policy.
I would rather concentrate on certain of the detailed consequences of the Government's policy and how the policy has evolved over the past few months. We have, first, the question of exactly what the Government's policy is or can be considered to be at present. When it was first announced that the Government intended to withdraw the grant from the grant-aided schools, it was stated without qualification that when the grant-aided schools ceased to be grant-aided the Government would not demand that they should opt for a particular status. The schools could opt for independent status or could become local authority schools in the area in which they were

situated. It was stressed by Ministers and others that the schools could opt to become local authority schools or go independent if they so wished.
I remind the Minister that his predecessor in office, the hon. Member for Aberdeen, North (Mr. Hughes), said that "They"—that is, the grant-aided schools—
will certainly have the right to choose which is the best course for them."—[Official Report, 23rd January 1975 ;Vol. 884, c. 1899.]
The choice would be between independence and local authority status.
Equally, the Secretary of State for Scotland said:
My hope is that it will be found possible for the schools to be fully integrated in the public system of education as comprehensive schools".—[Official Report, 11th March 1975 ;Vol. 887, c. 278.]
Indeed, some days later, in a letter dated 14th March 1975, from the Scottish Education Department to the Merchant Company in Edinburgh, it was stated that:
It is the Government's hope that the schools will be prepared to adopt the role of comprehensive schools integrated with the public system of education".
In other words, it was made clear that it the schools wished to opt for local authority status, not only were the Government willing but they were enthusiastic that the schools should so opt.
We have seen how, in the event, the vast majority of the schools—rightly, in my view—have chosen to opt for independent status rather than to be swallowed up in the Government-sponsored State system which they feel does not meet their requirements. But we have one school in Edinburgh—Mary Erskine School—which has requested to be integrated into the local authority system in the city of Edinburgh and the Lothian Region. Not only did the school wish to be integrated with the local authority; the local authority was anxious that it should be integrated, and made strong representations to the Government that this should be permitted.
Despite the wishes of the school and of the local authority, and despite the clear commitment by the Government to allow schools to opt for integration into the local authority, on two occasions the Government vetoed any proposals that would enable the school to do so. When


Opposition Members have criticised the Government about this they have been accused of playing party politics and putting forward a Conservative dogma, and of attacking a Government who were trying to meet the real requirements and education needs of the city of Edinburgh and the Lothian Region.
These are serious charges. Normally, it might be difficult for the Government or the Opposition to prove or disprove the basis of them, but it is not difficult in the present case. The request for this school to be allowed to integrate into the local authority did not come merely from Conservative councillors in the Edinburgh local authority; it came from an education committee controlled by the Labour Party, its chairman being a member of the Labour Party. The proposal that the school should be allowed to integrate had the unanimous support of all political parties in the Lothian Region. It was the view not only of all political parties but of all those involved in determining the education needs of the people of Edinburgh that it was in the interests both of the private sector and of the local authority sector that this integration should be allowed to take place.
If there is any doubt about this, I refer the Minister to some remarks by his hon. Friend the Member for Edinburgh, Central (Mr. Cook), who asked, on 21st January:
Does my hon. Friend accept that the result of the decision will be no endowment of the fees of the remaining Merchant Company schools, and that there is a serious fear among the Labour movement in Edinburgh that more than 1,000 pupils will drop out of these schools and come into the State system next autumn?"—[Official Report, 21st January 1976; Vol. 898, c. 1335.]
If there is alarmist talk, it is not merely from the Opposition Benches; it comes from Government supporters as well.
Perhaps the most eloquent remark about the Government's decision to veto this integration of Mary Erskine School came from the Chairman of the Lothian Region Education Committee, who is a member of the Labour Party and a Labour councillor—Councillor George Foulkes. He described the veto by the Secretary of State as "pathetic, callous and impudent." That is strong language. I can assure the Minister of the true Socialist credentials of the gentleman who used those words, because he was my

Labour opponent at the last General Election. Although I do not always agree with Councillor Foulkes' views on many political matters, the Minister must concede that there is all-party agreement that the Secretary of State was pathetic, callous, and impudent to all those concerned with education in the capital city of Scotland.
I ask the Minister to answer one simple question: are the Government still of the view that those grant-aided schools which want to integrate into the local authority system should be allowed to do so? If so, how does the hon. Gentleman reconcile that view with the veto by the Secretary of State? If that is no longer the policy, when did the change take place, and why?
The second matter to which I refer relates to the effects on parents with modest means of these schools going independent. The Minister will accept that if these schools go independent fees will have to rise once the grant has been withdrawn, and many parents with modest means will find great difficulty in paying the fees.
It is interesting to contrast the Government's attitude in Scotland with their attitude towards the same type of school in England and Wales. The Secretary of State for Education and Science said, on 27th October, that
if the fees rise because the schools go independent, parents who cannot afford them under the existing arrangements will get the benefit of the remission of fees scheme".—[Official Report, 27th October 1975; Vol. 898, c. 1191–2]
That scheme does not apply in Scotland, but in England it will ensure that parents of modest means are helped. This is a fundamental matter of principle. If the Government accept the principle for England and Wales, why do they not accept it for Scotland?
The Minister's predecessor, the hon. Member for Aberdeen, North, said, on 23rd January 1975:
Nor are we treating grant-aided schools in Scotland any more harshly than they are being treated in England and Wales."—[Official Report, 23rd January 1975; Vol. 884, c. 1900.]
If that is true, the Government must make a concession so that parents of modest means receive some help towards payment of increased fees.
On 11th March last year the Secretary of State for Scotland, asked whether help would be given, pointed out that the fees remission scheme did not exist in Scotland, and went on:
Whether anything can be done on these lines as the grant is tapered off will be subject to discussion."—[Official Report, 11th March 1975; Vol. 888, c. 280.]
Has there been any discussion of these matters? If not, when will it begin? What form will it take? Will the Minister accept that, since the principle of helping these parents south of the border has been conceded, similar steps should be taken by the Government to help parents of similar means in Scotland when, as is inevitable, the fees rise because of the Government's own policy of withdrawing the grant?
My third question is short and simple. When is it intended to bring forward the draft Regulations under which the grant will be gradually withdrawn over the next few years? Will copies be made available in advance to the grant-aided schools? They should be able to consider them so that their views can be taken into account when the House prays against them, as it certainly will, so that they can be fully discussed.
My final point relates to the disappointing reply that I received to my Written Question to the Secretary of State for Scotland,
whether he will meet parents and teachers at grant-aided and local authority schools in Scotland to discuss with them the effect of the Government's policy towards grant-aided schools".
The reply, in the name of the Minister who is before me tonight, was a simple, blunt,
No, Sir."—[Official Report, 11th February 1976; Vol. 905, c. 208.]
The Question did not ask him to concede any political point or to meet one group rather than another, but simply to hear the views of those in both sectors on the Government's policy.
Yesterday, the Minister took grave exception to the accusation of my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) that the Government's policy was motivated by spite, ideology and lack of interest. If his anger at that charge was justified, I am sure he will agree that his concern could best be demonstrated by reconsidering

that blunt, thoughtless and insensitive decision to refuse even to meet these people and discuss the effects of the Government's policy.
Whatever our differing views on priorities, we are all agreed that it is important to safeguard the educational interests of all children in the community and to realise that, in the unusual situation in Edinburgh—where there is a slightly unexpected identity of views between the Labour majority on the council and the Conservative Opposition, and between the local authority schools and the grant-aided schools ; where all four parties are in agreement on the main issues—there is an unusual and onerous burden on the Government to adopt a more flexible and reasonable position.
I hope that the Minister will not only answer my detailed questions but will discuss with his right hon. Friend the views that have been expressed, in order to see whether a more reasonable and honourable approach can be adopted to a matter of the gravest concern to many thousands of parents, pupils and teachers throughout Scotland.

11.46 p.m.

The Under-Secretary of State for Scotland (Mr. Frank McElhone): The hon. Gentleman's views on grant-aided schools, and on Mary Erskine School in particular, are becoming well known in the House. For the past four months he has repeatedly raised the issue at Question Time. I am not in the habit of giving advice to Conservatives, but I tell the hon. Gentleman that if he keeps pursuing the same issue about one school week after week and month after month the constituents of Edinburgh, Pentlands will be seriously asking themselves whether he is the hon. Member for Pentlands or for Mary Erskine. The only inference I can draw is that the hon. Gentleman must be very happy with the Labour Government's policy in Scotland when he has only the issue of Mary Erskine School to raise month after month.
The hon. Gentleman repeated the accusations we have heard so often in the past few weeks that our decision not to allow extra capital investment to the Lothian Region to acquire the Mary Erskine School proves that we have given up, or never seriously intended to implement, our idea of the grant-aided schools


integrating with the public system of education. That is far from being the case. As we see it, integration means the integration of pupils, not of bricks and mortar. By offering one of its three school buildings, the Merchant Company would acquire capital—about £2·75 million—which would enable it to limit the rise in the fees of the other two schools and thus enable more pupils to remain in selective schools than might otherwise be the case under the Government's policy, however reprehensible that policy might seem to the hon. Gentleman and his hon. Friends.

Mr. Rifkind: Will the Minister concede that in the examples of Government statements that I gave—and there are many other examples—the Government pledged that if schools wished to opt for independent status or local authority status it would be a matter for the schools themselves, where the school and the local authority wanted it? Why have the Government now changed their policy?

Mr. McElhone: It is not a question of changing our policy. No one is against the schools going independent. There is a freedom of choice in education. If they want to go independent, so be it, but the real difficulty for 90 per cent. or 95 per cent. of pupils in Scotland is that there is no choice. The people in favour of grant-aided schools and those who run them are entitled to pursue their aim. I do not doubt their sincerity, although I disagree with them, but they are not entitled to describe what they are trying to do as integration. The whole exercise at Mary Erskine School is to enable the two other schools under the control of the Merchant Company to keep their fees at a reasonable level to sustain this type of education in Edinburgh.
The Government's decision not to grant extra capital investment to Lothian Region to acquire the Mary Erskine School was not based on any theory of integration. I should like to put on record why I reject the accusations made tonight by the hon. Member and by the Chairman of the Lothian Region against my right hon. Friend the Secretary of State, whose long service in this House has reflected a tremendous interest in education, for the greater good of all the pupils in Scotland.
The Government's decision reflected the fact that the Secretary of State was not satisfied that the prospective need for school places in Edinburgh resulting from the policy on grant-aided schools was so great as to justify the purchase of this very expensive school. It would cost £2·75 million, plus £600,000 for conversion.
I wish to deal with the question of the fall-out of pupils. On this, the hon. Member for Pentlands referred to comments by my hon. Friend the Member for Edinburgh, Central (Mr. Cook). My hon. Friend referred to the fact that 1,000 pupils would fall out of the grant-aided system this year. I replied to my hon. Friend on that point. The delegation from the Lothian Region came to see me and pointed out that there would be 1,000 young people on the streets if we did not allow them to acquire the Mary Erskine School. That figure is not correct. The Lothian Region intends to phase out the primary sector of the school, and that brings the number down to 600 pupils. I took the trouble to check what is called the "scatter graph" in the Lothian Region Department of Education. It showed that these pupils did not come just from West Edinburgh, where I am told the problem lies; they came from the catchment areas of 13 schools within Edinburgh. In fact, 91 of the pupils actually came from outside Edinburgh. My investigations, along with those of the inspectors of schools, show that the pressure will be on only three schools if the Mary Erskine School closes. I do not believe that it will close. Instead of 1,000 pupils being under stress, the approximate figure, as we have it from the Lothian Region, is 225.
We come to the figures for the fall-out of pupils in the period from January 1974 to September 1975. These are 406 for the primary pupils and 201 for the secondary. That is a fair number, but it is not a landslide. The education authority says that it is able to cope so far but that if the number accelerates there will be difficulties, in the sense that some schools will be overcrowded and some children will not be able to go to the schools nearest their homes. I recognise these difficulties, but they have existed in many parts of Scotland. At present, when resources are scarce, there is no quick solution to the problems.
If capital investment in education could be increased by £3 million it is far from clear that Edinburgh would have first claim on the extra resources. We have to get our priorities right. Neither I nor my right hon. Friend has closed the door. We have said that we are not yet satisfied that in a period of financial constraint we should spend £3 million. But if the pressure in West Edinburgh should build up to create what we regard as a serious problem, of course we would be prepared to consider the matter again. That is only reasonable.
Hon. Members opposite have asked about the Regulations relating to grant. These are in preparation and they will be made as soon as possible—probably within the next few weeks—since I know that some of the schools at least will shortly he actively engaged in preparing their estimates for the coming financial year and they are naturally anxious to see the terms of the Regulations. However, I do not think there will be any surprises in them. The existing Regulations date from 1959 and they have been amended three times, so we are going to proceed this time not with a further amendment but by making entirely fresh Regulations, revoking all the previous ones. The opportunity will be taken to tidy them up in various ways.
The only really new matter will be that which the schools already know about—the phasing out of the grant over six years, beginning in the next schools' financial year. The effect will be that the grant for the next financial year will be six-sevenths of the grant for the present financial year, five-sevenths in the year after that, and so on, so that it is extinguished entirely at the end of six years.
The hon. Member for Edinburgh, Pentlands asked whether we intend to consult the schools about the Regulations before they are made. I do not think that will be necessary. There was extensive consultation with all the schools at meetings last year, after the Government's policy had been announced.
Hon. Members opposite have alleged that by phasing out the grant, the Government are threatening to destroy schools that have a high reputation and

to achieve equality by levelling down. Nothing could be further from the truth

Mr. Rifkind: Before the hon. Gentleman deals with that important point, will he say whether the Government will make provision, as in England and Wales, to help parents of modest means when their children's schools go independent? Does he stick to the Secretary of State's commitment to discuss this problem to see whether anything can be done to help?

Mr. McElhone: I hope to be able to refer to that matter later. It is not our intention to have a levelling down. Some of the grant-aided secondary schools are good schools, but there are good schools too in the public sector.
Fees remission does not extend to Scotland, but in certain grant-aided schools, including Morrison College, at Crieff, local authorities subsidise pupils. I understand that that does not happen in Edinburgh, but I think there would be no objection to this happening for a certain period of time. It is not our intention that it should be for a long period. We want to phase in those schools wishing to go comprehensive, and those that want to remain selective must pay for it.

Mr. Rifkind: Will the Minister confirm that he is saying that for an interim period the Government might not be averse to a local authority so assisting parents of modest means whose children's schools opt to go independent?

Mr. McElhone: I say that with some caution. I am open to correction. I was not aware that the hon. Member would be raising this point. It could be considered for a short period. Local authorities might be able to help these parents, but only for a temporary, transitional period. It is a matter I would like to discuss with local authorities. Our commitment is only to discuss, not to agree.
We are flexible. The hon. Member for Pentlands has paid tribute to my own flexibility in the short time that I have held this office. I thank him for initiating this debate. It has given me the opportunity of clearing up a few points which have not got across in the House or in the Press.
Though he disagrees with us, I can tell the hon. Member that we wish to build a strong system of comprehensive education. We do not object to children being educated in the selective sector, as long as the independent schools are prepared to pay for it—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Twelve midnight.